When no news is no news

Last week, one of the staffing industry’s perennial news stories reappeared across recruitment and financial media once again – “Adecco in Hays bid speculation”. Like a slightly dotty great aunt that turns up once a year to pay her respects, Adecco’s supposed acquisition of the UK specialist recruiter is a regular visitor to news desks. Type ‘Adecco Hays bid” into Google and you’ll get rewarded with 128,000 hits.

On Friday, Adecco spokesman, Stephan Howeg, responded: "We cannot comment on speculation. What we can say is that bolt-on acquisitions are possible." In May, Chief Executive, Patrick de Maeseniere told the market that Adecco had a budget of €150m for bolt-on purchases – far short of the supposed £2.2 billion they are rumoured to be paying for Hays.

The Adecco media/investor relations team must have a ‘Hays Rumour Response Plan’ tucked safely away in a drawer that they have to pull out and dust off every now and again. Action 1 – Make no comment on market rumour. Action 2 – make vague reference to general acquisition strategy. Action 3 – file plan safely away in drawer for next time.

As one of the world’s larger specialist recruitment firms (it claims to be the largest but the definition “specialist” is a bit fluid), Hays has often been perceived as an attractive target for its larger competitors. The company’s business profile is further enhanced through a market leadership position in the important UK and Australian staffing markets and a strengthening position in emerging markets. However, the company is also subject to a relatively high proportion of volatile permanent placement in its business mix and, at the moment its exposure to the UK public sector is not doing its UK earnings any favours.

While, on paper, there is some rationale for putting the two companies together, Adecco is still digesting two sizable acquisitions it made last year (MPS and Spring) so is unlikely to have much of an appetite for the 5th largest staffing company in Europe. Especially, when there are smaller, less risky and more focused specialist staffing firms that the Company can set its sights on – in keeping with its stated acquisition strategy.

Aside from last week’s speculation which, at one time, added 4.9% to Hays’ shares, the Adecco bid rumour has been floated on the following occasions in recent years:-

  • October 2007 – Hays’ share price lifted 2.7%
  • August 2008 – Investors identified Hays as a potential reserve target when Adecco was in bid talks with rival, Michael Page (Adecco was eventually rebuffed by Michael Page management)  – Hays’ share price lifted 3.7% over the period
  • September 2010 – Hays’ share price lifted 4.9% (Adecco subsequently acquired large US specialist recruiter, MPS Group a month later)

Of course, one day, it’s just possible that the rumour might actually turn out to be true – stranger things have happened. Most seasoned industry observers however, will regard the reappearance of the story simply as a recurring fantasy resuscitated by a bored and unimaginative hack on a slow news day.


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