Marlborough International has fulfilled its promise to expand into the British market, with an agreement to acquire UK recruitment company Walker Hamill Ltd for £17.6 million sterling (£20.9 million) in a reverse takeover.
Shares in Marlborough were suspended yesterday pending shareholder approval of the acquisition which is categorised as a reverse takeover under Stock Exchange rules because the consideration exceeds the net assets of the Marlborough group.
The company, which listed on the Developing Companies' Market (DCM) and on London's Alternative Investment Market (AIM) in October, will also seek a full listing on the Irish and London Stock Exchanges.
Walker Hamill is a private company which employs 48 people and has headquarters in London and offices in Reading in England and Sydney in Australia. Founded in 1989, it specialises in executive selection and in the recruitment of accountants and strategy consultants.
It recorded pre-tax profits of more than £2.0 million sterling in the year to September 30th, 1997. The value of the net assets being acquired is £909,000 sterling.
Marlborough managing director Mr David McKenna said Walker Hamill is one of the top five names in the UK executive selection market, recruiting for 78 of the top FTSE 100 companies in Britain. It was acquired at a multiple of 13.5.
He said the acquisition enabled Marlborough to get into the UK marketplace with a strong brand name while Walker Hamill, with its office in Australia, also gave Marlborough a global perspective.
Mr Brian Hamill, a director of Walker Hamill, said it had been seeking a company that would be synergisitic and committed to developing the business.
The consideration will be satisfied by the payment of £10 million sterling in cash to the three equal shareholders, Mr Hamill, Mr Robert Walker and UK venture capital company Equity and Corporate Finance Plc.
Marlborough will use existing resources of £5.5 million, raised at the time of flotation, and bank borrowings of £4.5 million to fund the payment. The balance will be satisfied through the issue of five million shares at £1.52 sterling per share.
The vendors are prohibited under the agreement from disposing of their shares for a period of time under a lock-in agreement. Mr Walker and Mr Hamill, the company's executive directors, will remain with the company under new service contract agreements and will become directors of Marlborough.
Following the issue of shares, Mr McKenna's shareholding will drop to 44.5 per cent from 53 per cent while the new shareholders will own 16 per cent of the company.
If all goes to plan, Marlborough's shares should begin trading on the official list of the Stock Exchange in the first week of March. A full listing will make the company more attractive to international fund managers and will make it easier to raise funds if it needs to do so down the line, Mr McKenna said.
