Melbourne service sector companies, Skilled Group (SKE) and Programmed Group (PRG), have re-entered talks about a possible merger only months after Skilled rejected a takeover offer from the company.
Skilled said yesterday it had agreed to enter the talks after Programmed indicated it may lift its first offer of $1.38 a share.
But Skilled said there was no guarantee the discussions would lead to a deal.
It rejected the $1.38 a share offer from Programmed back in January.
Both companies have been under pressure from the slowdown in investment and the weak labour market. Clients are cutting costs, budgets and contracts and service groups like Skilled and Programmed are feeling the financial impact.
SKE vs PRG 1Y – Skilled, Programmed in talks
Skilled said in a short statement to the ASX, "Programmed has indicated that it is prepared to enhance the terms upon which the companies may be combined and consequently, the SKILLED and Programmed Boards have agreed that there is merit in pursuing further discussions.
"There is no certainty that these discussions will result in a transaction and SKILLED shareholders need take no action. SKILLED will make a further announcement when discussions have concluded.
"SKILLED is well advanced in the strategic review of its business. The outcome of the review will ensure that SKILLED is well positioned to continue to grow and compete in a dynamic and changing labour environment, either as a standalone business or as part of any merged group. Planning for the implementation of the strategy is underway,” the company’s statement ended.
In a separate statement, Programmed said it "believes there is considerable merit in combining the businesses for both groups of and customers and looks forward to progressing discussions with Skilled and will update its shareholders as appropriate. There can be no guarantee that a transaction will proceed. Programmed will report its annual results for the year ending 31 March 2015 on this Wednesday 27th May.”
Naturally Skilled shares rose – up more than 11% to $41.37, but Programmed shares fell (naturally), down more than 4% to $2.51.
