Blue collar workforce specialist AWF adds white collar recruiter Madison for $36M

AWF Group, New Zealand’s largest provider of temporary staff, has agreed to buy Madison Group for as much as $36 million to expand into the recruitment of professional workers from its core business of recruiting labourers.

Madison Group had sales of more than $56 million in the year ended March 31, compared with AWF’s revenues of $131 million. AWF expects earnings per share for the combined underlying business to lift by more than 50 percent after a complete financial year in 2015, allowing steady growth in dividends, the Auckland-based company said in a statement.

AWF wants to bolster earnings by diversifying its business away from its core base of “blue collar” sectors into the “white collar” recruitment and contracting sector where Madison is the market leader.

Earnings before interest, tax, depreciation and amortisation in AWF’s core business fell by 15 to 20 percent in the six months ended Sept. 30 on a small increase in sales as key areas of forecast growth such as the rebuilding of earthquake damaged Christchurch haven’t yet eventuated, the company said today. In contrast, Madison is experiencing strong revenue and earnings growth in the current financial year, AWF said, without providing details.

“AWF Group had established a very strong market position in the largely blue collar sectors but as indicated by the current flat performance expected for the first six months this year, a broader sector involvement is required to achieve sustainable growth,” director Simon Hull said in the statement.

AWF has agreed to pay $30 million at the completion of the acquisition with an additional $6 million to be paid should earnings exceed certain thresholds by late November 2014.

AWF has agreed the required debt facilities with its bankers. It currently has no debt.

Shares in AWF last traded at $2.93, taking their gain so far this year to 22 percent.


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