RNS Number:1314V
Reed Health Group PLC
26 April 2002
Not for release, publication or distribution in or into the United States,
Canada, Australia, the Republic of Ireland or Japan
26 April 2002
Reed Health Group plc
Proposed acquisition of The Locum Group Limited and placing and open offer
Reed Health Group plc ("Reed Health" or the "Company"), the provider of
healthcare staffing services to the public and private sectors in the UK, today
announces the acquisition of The Locum Group Limited ("Locum"), a specialist in
the placement of staff in the healthcare sector, for a total consideration of
£33.7 million, payable in cash. In addition Reed Health announces a placing and
open offer to raise approximately £20.9 million (net of expenses) through the
issue of 14,911,193 new ordinary shares of 2p each at a price of 150p per share.
Highlights:
• Acquisition of Locum for £33.7 million, payable in cash
• Acquisition to be financed by a placing and open offer to raise
£20.9 million (net of expenses), Reed Health's existing cash balances and
new banking facilities
• Issue price of 150p per new ordinary share
• Dealings in new ordinary shares are expected to commence on 27 May 2002
Commenting on the acquisition and fundraising, Christa Echtle, Chief Executive
of Reed Health said:
"The acquisition of Locum gives Reed Health a major opportunity to further
develop its healthcare staffing business and broaden the range of services
offered by the group. Locum gives us access to additional clients and a larger
pool of candidates as well as giving us an entry into the doctor and teacher
recruitment markets. We are also very pleased to have had a good response from
institutional investors to our fundraising.
The acquisition will help Reed Health to position itself in the specialist
recruitment areas of healthcare, social care and education and we are confident
about the prospects for the enlarged group".
Enquiries:
Reed Health Group plc - 020 7834 3181:
Christa Echtle, Chief Executive
Desmond Doyle, Group Finance Director
Robert W. Baird Limited - 020 7488 1212:
Nicholas Naylor
Xavier de Mol
Weber Shandwick Square Mile - 020 7950 2800
Louise Robson
Graham Herring
Not for release, publication or distribution in or into the United States,
Canada, Australia, the Republic of Ireland or Japan
26 April 2002
Reed Health Group plc
Proposed acquisition of The Locum Group Limited
and
placing and open offer
Reed Health Group plc ("Reed Health" or the "Company" and, together with its
subsidiaries, "Reed Health Group" or the "Group") announces today that it has
conditionally agreed to acquire The Locum Group Limited ("Locum" and, together
with its subsidiaries, the "Locum Group"), a specialist in the placement of
staff in the healthcare sector, for a consideration of £33.7 million, to be
satisfied in cash (the "Acquisition"). In addition, the Board of Reed Health
Group (the "Board") has announced today a placing and open offer by the Company
(the "Placing and Open Offer") to raise approximately £20.9 million (net of
expenses) by way of the issue of 14,911,193 new ordinary shares of 2p each ("New
Ordinary Shares") at a price of 150p per New Ordinary Share (the "Issue Price").
The Placing and Open Offer have been fully underwritten by Robert W. Baird
Limited ("Baird").
The Acquisition is to be financed by the net proceeds of the Placing and Open
Offer, the Company's existing cash balances and new banking facilities. The
Acquisition and the Placing and Open Offer are conditional upon, inter alia, the
approval of Reed Health's shareholders.
Background on Reed Health Group
Reed Health Group is one of the main providers of temporary healthcare personnel
to the public and private sectors in the UK. Reed Health Group currently
operates through 28 branches located throughout the UK.
(i) Reed Social Care: Reed Social Care provides social care workers to
local authority social services departments and to the private and independent
sector across a wide range of services such as childcare, mental health,
residential care, community support and caring for the elderly. In addition,
Reed Social Care is developing its operations to include the provision of direct
services to local authorities which would typically include the outsourcing by
social service departments of the management and staffing requirements of a
social care service.
(ii) Reed Nurse: Reed Nurse specialises in the provision of nurses on a
temporary basis to a range of health sector organisations, but primarily to NHS
Trusts. Reed Nurse supplies nurses of varying skill levels, ranging from
unqualified auxiliary nurses to highly specialised qualified nurses such as
critical care nurses. Services provided by Reed Nurse include spot placements,
supply of contract nurses and administration of a nursing 'bank' on behalf of
the Hammersmith and the Charing Cross hospitals in London. In July 2001 Reed
Nurse was approved as a supplier of specialist nurses under the London Agency
Project and this has given Reed Nurse the opportunity to enter into service
negotiations with a number of new NHS clients.
(iii) Reed Health Professionals: This division primarily supplies
qualified health professionals such as physiotherapists, occupational therapists
and optometrists.
Reed Health Group's strategy is to develop its healthcare staffing business, by
both building on its existing services such as consultancy and specialist
healthcare staffing outsourcing and by offering new innovative services to its
clients such as integrated nursing and social care. The Directors have also been
looking at opportunities for the Group to diversify into other healthcare
sectors and other public sector areas and the Acquisition is part of this
strategy. The Board believes that the growing demand for healthcare staff will
continue to provide considerable opportunities for the Group.
Based on its unaudited results, Reed Health Group had turnover of £66.8 million
for the 52 week period ended 1 July 2001 (Reed Social Care - £26.2 million, Reed
Nurse - £29.9 million, Reed Health Professionals - £10.7 million) and profit
before tax of £4.3 million. The Group's turnover for the 26 week period to 30
December 2001 increased by 17.7 per cent. to £37.9 million compared with £32.2
million for the 26 weeks to 29 December 2000. Operating profit, before costs
associated with the demerger from Reed Executive PLC, was £2.3 million, compared
with £2.4 million for the comparative period. The reduction in operating profit
before costs associated with the demerger was principally due to Reed Health
Group necessarily incurring higher central costs as a consequence of being an
independent listed company. Pre-tax profit, after costs associated with the
demerger of £156,000, was £2.2 million.
Background on the Locum Group
The Locum Group is principally involved in the placement of temporary and
permanent, spot placement and contract staff in the UK healthcare sector. In
addition, the Locum Group operates a business specialising in the temporary
placement of qualified teachers in schools. It is based in Ilford, Essex,
operates from locations in England, Scotland, the Republic of Ireland, Australia
and New Zealand and has approximately 140 full time employees.
The Locum Group's business consists of four divisions which, for the year ended
31 October 2001, generated the following turnover:
£ million
Locum Group Health Recruitment 18.9
Locum Group Medical Recruitment 9.7
Locum Group Care Recruitment 5.5
Locum Group Education Recruitment 4.6
Total 38.7
The Locum Group's business divisions are as follows:
(i) Locum Group Health Recruitment: Locum Group Health Recruitment
provides health, technical and scientific professionals, of most grades and
specialities, to NHS Trusts and the private healthcare sector throughout the UK.
As at 31 October 2001, Locum Group Health Recruitment had a database of
approximately 15,000 professionals including audiologists, pharmacists,
dentists, dieticians, physiotherapists, psychologists, biomedical scientists,
occupational therapists, theatre nurses and operating department practioners.
(ii) Locum Group Medical Recruitment: Locum Group Medical Recruitment
provides qualified doctors to NHS Trust hospitals and primary care groups on
both a spot and contract basis. Locum Group Medical Recruitment provides a 24
hour, 365 days a year on-call service catering for the emergency requirements of
its medical and residential care clients.
(iii) Locum Group Care Recruitment: Locum Group Care Recruitment
principally provides care workers, social carers and housing staff on a
preferred or approved supplier basis to local authorities, residential care
homes and private care homes in the UK.
(iv) Locum Group Education Recruitment: Locum Group Education Recruitment
provides qualified teachers on a temporary and permanent basis to primary,
secondary, independent, nursery and special needs schools.
The Locum Group uses a number of methods to source qualified candidates. These
include: advertising in professional journals; attending trade fairs,
conferences and exhibitions; and through Locum's website, where candidates can
register online. The Locum Group also sources candidates from overseas and has
recently acquired its Australian agent which sources qualified candidates from
Australia and New Zealand. In addition, Locum uses agents based in Canada and
South Africa to source candidates for its clients in the UK. All Locum's
candidates undergo screening checks and interviews in accordance with industry
standards.
Summary financial information regarding the Locum Group is set out below:
Year to 31 October
2001 2000 1999
£ million £ million £ million
Turnover 38.7 28.7 22.2
Operating profit - before goodwill amortisation 2.4 1.4 0.7
Operating profit - after goodwill amortisation 1.9 0.8 0.2
Net interest payable (0.1) (0.1) (0.2)
Profit before tax 1.8 0.7 (0.0)
During the financial year ended 31 October 2001, the Locum Group's turnover
increased from £28.7 million in the previous financial year to £38.7 million.
This increase reflects the expansion of the Locum Group's business through the
introduction of new services and the increase in the volume of staff provided to
existing clients, new client wins and the opening of new offices. Over the same
period, the Locum Group's operating profit before goodwill amortisation
increased from £1.36 million to £2.43 million. As at 31 October 2001, the net
assets of the Locum Group were £9.8 million.
Background to, and reasons for, the Acquisition and the Placing and Open Offer
The Board believes that the acquisition of Locum represents a major opportunity
for the Group to further develop its business. The Acquisition will increase the
Group's presence in the healthcare staffing market in the UK, broaden the range
of services offered by Reed Health Group and give the Group access to additional
clients and a larger pool of candidates. In particular, the Board believes that
the following benefits for the Group will result from the Acquisition:
(i) entry into new areas of the healthcare market to provide doctors to
NHS Trusts, primary care groups and hospitals;
(ii) development of some of Reed Health Group's existing niche markets, such
as pharmacy, and entry into new markets, such as radiography and
dentistry;
(iii) greater access to overseas candidates through Locum's Australian
operation and other overseas agents;
(iv) increased scale of operation in the social care staffing
market; and
(v) entry into the education sector by supplying teachers to schools.
The Acquisition will help Reed Health Group to position itself in the specialist
recruitment areas of healthcare, social care and education - three of the
largest public sector staffing areas.
The Board expects that, ignoring synergy benefits, cross-selling opportunities
and goodwill amortisation, the Acquisition will be significantly earnings
enhancing for the Group in its first full financial year of ownership. This
statement should not be interpreted to mean that the Group's future earnings per
share will necessarily be greater than its historical earnings per share.
Current trading and prospects
The Board believes that Reed Health Group remains well placed in its markets to
continue to grow. The Board also believes that the diversification of the
Group's service offering, combined with market growth (arising from demographic
changes and a supply shortage of healthcare professionals) and continuing public
/private working arrangements, should allow the Group to continue to take
advantage of the opportunities which exist in its markets. Since 30 December
2001, Reed Health Group's trading has been strong and the Board view the outlook
for the remainder of the financial year to 30 June 2002 positively.
The management accounts of the Locum Group show that it continues to trade in
line with its budget. In the light of this, the Board is confident in the
prospects for the enlarged group for the current financial year and believes
that, following the Acquisition, the enlarged group will improve its position as
one of the main providers of personnel and services to the healthcare markets in
the UK.
Principal terms of the Acquisition
The Company has conditionally agreed to acquire the entire issued share capital
of Locum, debt free, for a consideration of £33.7 million payable in cash. The
Acquisition is conditional upon, amongst other things, the resolutions to be
proposed at the extraordinary general meeting and the class meetings of ordinary
and 'B' ordinary shareholders convened for 21 May 2002 being passed, and
admission of the New Ordinary Shares to the Official List of the UK Listing
Authority and to trading on the London Stock Exchange ("Admission").
The Company has arranged banking facilities of £12 million. Approximately £7.8
million of these facilities will be used to finance the Acquisition with the
remaining amount being available for general corporate purposes.
Details of the Placing and Open Offer
The Company is proposing to raise approximately £20.9 million (net of expenses)
pursuant to the Placing and Open Offer by the issue of 14,911,193 New Ordinary
Shares. Baird, as agent for the Company, has conditionally agreed to place
6,556,111 New Ordinary Shares at the Issue Price with institutional and other
investors, subject to clawback to satisfy valid applications by qualifying
shareholders under the Open Offer.
Certain shareholders (being principally members of the Reed family, including
James Reed, one of Reed Health Group's directors) have irrevocably undertaken to
the Company and Baird not to take up their entitlements of New Ordinary Shares
under the Open Offer in respect of 8,355,082 New Ordinary Shares, representing
approximately 56 per cent. of the New Ordinary Shares. Accordingly, these New
Ordinary Shares have been placed firm with institutional and other investors by
Baird at the Issue Price.
Qualifying shareholders are being given the opportunity to subscribe under the
Open Offer for New Ordinary Shares at 150p per share on the following basis:
1 New Ordinary Share for every 3 existing ordinary shares and/or
existing "B" ordinary shares
held by them on 18 April 2002 (the "Record Date"), rounded down to the nearest
whole number, and so in proportion for any other number of existing ordinary
shares and/or existing "B" ordinary shares then held. Fractions of New Ordinary
Shares will not be allotted to qualifying shareholders but, together with New
Ordinary Shares attributable to those overseas shareholders that are not
eligible to participate in the Open Offer, will be aggregated and subscribed for
under the placing agreement between the Company and Baird (the "Placing
Agreement") and the proceeds will be retained for the benefit of the Company.
Qualifying shareholders may apply for any number of New Ordinary Shares up to
their maximum entitlement, as set out in their application form.
The New Ordinary Shares will, when issued, be identical to, and rank pari passu
in all respects with, the existing ordinary shares. It is expected that
Admission will become effective and dealings in the New Ordinary Shares will
commence on 27 May 2002.
The Placing and Open Offer are conditional, inter alia, upon the Placing
Agreement and the acquisition agreements having become unconditional and not
having been terminated in accordance with their terms prior to Admission. The
Placing and Open Offer are not, however, conditional upon completion of the
Acquisition since the subscription proceeds from the Placing and Open Offer are
required to fund part of the consideration payable to the vendors in order that
completion of the Acquisition takes place. Under the terms of the acquisition
agreements it is intended that the Acquisition will be completed in escrow on
the business day prior to Admission, the sole escrow conditions being Admission
and the payment of the consideration to the vendors. The Placing Agreement is
conditional upon such completion in escrow having taken place. It is expected
that Admission will occur on 27 May 2002 and that actual completion of the
Acquisition will occur on 28 May 2002. If the conditions of the Placing
Agreement and the acquisition agreements are not fulfilled or waived on or
before 8.30 a.m. on 27 May 2002 (or such later time and dates as may be agreed,
being no later than 8.30 a.m. on 10 June 2002), the Placing and Open Offer will
not become unconditional and application monies will be returned to applicants,
without interest, as soon as practicable thereafter.
Holders of "B" ordinary shares who subscribe for New Ordinary Shares under the
Open Offer should note that the New Ordinary Shares that they will receive if
the Open Offer becomes unconditional will be admitted to the Official List of
the UK Listing Authority and to trading on the London Stock Exchange, unlike
their existing "B" ordinary shares.
Completed application forms must be received by no later than 3.00 p.m. on 20
May 2002. The latest time and date for splitting application forms (to satisfy
bona fide market claims only) is 3.00 p.m. on 16 May 2002. Application forms
are personal to the qualifying shareholders named thereon and are transferable
only to satisfy bona fide market claims.
General
The Open Offer is not being made directly or indirectly in or into the United
States of America, Canada, Australia, Japan or the Republic of Ireland. The
Company and Baird reserve the right in their absolute discretion to treat as
invalid any application for New Ordinary Shares under the Open Offer if it
appears to the Company and Baird and their agents that such application or
acceptance thereof may involve a breach of the laws or regulations of any
overseas jurisdiction.
A prospectus containing details of the Acquisition, the Placing and Open Offer
and notices of an extraordinary general meeting of the Company and class
meetings of the holders of ordinary shares and "B" ordinary shares in the
Company, convened from 9.30 a.m. on 21 May 2002 at the offices of Robert W.
Baird Limited, Mint House, 77 Mansell Street, London, EC1 8AF, will be posted to
qualifying shareholders today, together with the application form and separate
forms of proxy for use at the extraordinary general meeting and the class
meetings. Copies of the prospectus will be available to the public, free of
charge from the offices of Robert W. Baird Limited and the registered office of
the Company for a period of 14 days from today. A copy of the prospectus has
been submitted to the UK Listing Authority and will shortly be available for
inspection at the UK Listing Authority's Document Viewing Facility which is
situated at Financial Services Authority, 25 The North Colonnade, Canary Wharf,
London E14 5HS.
Robert W. Baird Limited, which is a member of the London Stock Exchange and is
regulated by the Financial Services Authority, is acting exclusively for Reed
Health and no-one else in relation to the Acquisition and the Placing and Open
Offer and will not be responsible to anyone other than Reed Health for providing
the protections afforded to clients of Robert W. Baird Limited nor for providing
advice in relation to the Acquisition and the Placing and Open Offer. No
representation or warranty, express or implied, is made by Robert W. Baird
Limited as to any of the contents of this announcement.
This announcement, which is the sole responsibility of Reed Health, has been
approved by Robert W. Baird Limited for the purposes of Section 21 of the
Financial Services and Markets Act 2000. Robert W. Baird Limited, which is
regulated by the Financial Services Authority, is acting as the Company's
financial adviser and stock broker in connection with the Acquisition and the
Placing and Open Offer.
Unless the context requires otherwise, terms and expressions used herein shall
bear the same meaning as used in the prospectus that will be posted to
shareholders today.
26 April 2002
ENDS
This information is provided by RNS
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