ZURICH: Swiss staffing company Adecco Group is buying US-based technology education provider General Assembly for US$412.5 million including debt, it said on Monday (Apr 16), adding heavy investments in the business would initially drag on earnings.
General Assembly, whose founders include Hyatt hotels heir Adam Pritzker, is a private school business started in 2011 that provides training in fields such as data science and analysis. Its revenues in 2017 were about US$100 million with a strong 2018 booking backlog, Adecco said in a statement.
Adecco has gone into acquisition mode to kickstart growth and address its lagging performance compared with faster-growing rivals, such as Randstad.
Adecco, which has branches in Singapore and Hong Kong, said it saw synergies between General Assembly and its own training business, in particular the Lee Hecht Harrison career transition business.
"General Assembly is currently in a high-growth investment phase and is therefore expected to be modestly dilutive to Group earnings in 2018, the impact of which is included within the group's current guidance on planned strategic investments," Adecco said in a statement.
"From 2019, General Assembly is expected to be modestly accretive to earnings," it added. "In the medium-term General Assembly’s EBITA (core earnings) margins are anticipated to be significantly higher than the group average."
Over the last three years, Adecco said General Assembly's revenue had grown at a compound annual rate of 30 per cent.
The total enterprise value (equity plus debt) of the deal is US$412.5 million, Adecco said, adding General Assembly would continue to operate as a separate division under its Chief Executive Jake Schwartz, a co-founder.
General Assembly lists Viacom, Pearson and L'Oreal as clients, according to its website.
Analysts from Zuercher Kantonalbank (ZKB), who earlier this month downgraded their rating on Adecco to "market weight", said they were not expecting a big market reaction to the deal, which represents less than 1 per cent of the Swiss company's €23.7 billion (US$29.2 billion) in annual sales.
"The takeover price is high," ZKB said. "However, there is a significant synergy potential and the growth profile of Adecco is slightly improved."
The shares fell 0.7 per cent in early trading in Zurich.