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South Africa’s largest staffing firm, Adcorp (ADR:JNB), said on Monday it would introduce a new 10-year broad-based black economic empowerment (BBE) deal worth ZAR 521 million (USD 56 million) after its previous one no longer benefitted appropriate stakeholders.
South African companies are required by law to boost black ownership to rectify the imbalances of apartheid. CEO Richard Pike said Adcorp prided itself on being an empowered company and needed to increase empowerment procedures.
The company said in a statement that its previous deal would not benefit its employee share trust or black economic empowerment partners. “Adcorp implemented its current broad-based BEE transaction in April 2007, prior to the global financial crisis, and the growth assumptions and other variables which were applied have subsequently turned out to be inappropriate for the post-global financial crisis environment,” the firm said.
“In order to maintain Adcorp’s excellent broad-based BEE rating and its status as one of South Africa’s most empowered companies, Adcorp is proposing the introduction of a new 10-year broad-based BEE transaction and the unwinding of its 2007 … transaction .”
The company will repurchase thousands of shares which will be issued in proportions. 35% will go to Wiphold Financial Services, an investment company owned by black women and a wholly owned subsidiary of Women Investment Portfolio Holdings. 25% will go to Thornbird Trade and Invest, a wholly owned subsidiary of investment company Simeka Group.
Adcorp recently acquired Australian IT recruiter Paxus in a deal worth AUD 60 million. The firm’s financial position has been robust with revenue in the six months to August 2012 rising by +41% to ZAR 4 billion (USD 430 million). Based on its stock price, Adcorp has a market value of ZAR 2.83 billion (USD 304 million).