The world's third-biggest staffing firm Randstad is in talks with Vedior that may lead to it buying its smaller rival, creating a firm with annual sales of 15.8 billion euros ($23.30 billion). "If and when an offer is made, it will include a significant equity component," Randstad said in a statement on Friday.
Fourth-ranked Vedior had earlier announced it was in preliminary talks with its rival. At that price, Vedior is trading at 13.15 times projected 2007 earnings, still below the price-earnings ratio of 15.3 for the DJ Stoxx Industrial Goods and Services index. By comparison, Randstad shares, which were down 1 percent, are at 9.7 times projected 2007 earnings, according to Reuters data.
Shares in Vedior had initially jumped on market talk the company could be broken up or taken over by the world's biggest jobs firm Adecco. Adecco declined to comment and reaffirmed its interest in acquisitions up to the value of 1 billion euros.
Dutch rivals USG People and Brunel also rose strongly. Vedior, which makes 40 percent of its sales in France and 9 percent in the United States, focuses on the specialist and permanent placing markets. Analysts say this makes it well-placed to ride out the fall in the US and Dutch markets.
Last month, Randstad, which gets just over a third of turnover in the Dutch market and focuses more on the blue collar worker segment, forecast slowing growth. Vedior is conducting a strategic review under new Chief Executive Tex Gunning and had planned to announce the results in February with its annual figures. Gunning has said the company does not plan to sell its key French activities or large chunks of the business.
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