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Adecco to acquire professional staffing firm MPS Group

Adecco to acquire professional staffing firm MPS GroupThe acquisition significantly strengthens Adecco's professional staffing business, making Adecco the world leader in this attractive market segment

Adecco Group, the world's leading provider of HR solutions, announced today the acquisition of MPS Group, Inc. ('MPS Group'), a leading provider of professional staffing services, for an enterprise value of EUR[1] 782 million, or USD 13.80 per share. This acquisition will significantly enhance Adecco's position in the professional staffing business, particularly in the USA & Canada and the UK. Adecco expects the transaction to be accretive on an adjusted EPS[3] basis in the first year and EVA[4] positive within three years.

Patrick De Maeseneire, Chief Executive Officer of the Adecco Group, comments: "We are delighted to have MPS Group become part of the Adecco Group, in a move that will see Adecco taking the world-wide lead in professional staffing. The acquisition of MPS Group is an important step in Adecco's stated strategy to strengthen the higher margin professional staffing business, which offers attractive growth over the coming years. With this transaction and the successful closing of the Spring Group acquisition, Adecco's revenue mix is significantly improved with close to 25% of group revenues to be generated in the professional staffing business. This is up from 17% of group revenues based on 2008 results."

MPS Group is a leading provider of specialty staffing, consulting, and business solutions across various professional business lines such as information technology (Modis, Idea Integration), finance and accounting (Accounting Principals and UK-based Badenoch & Clark), legal (Special Counsel), engineering (Entegee) and healthcare (Soliant Health). MPS Group is one of the largest professional staffing firms in North America and also has a strong position in the UK. In 2008, MPS Group generated revenues of EUR[2] 1.5 billion. MPS Group achieved an average EBITDA margin of 6.3% between 2004 and 2008.

Joining forces with MPS Group will provide Adecco with a platform to significantly expand its professional staffing business in the USA & Canada and the UK. Together, Adecco and MPS Group provide compelling staffing solutions to small & medium-size and large account clients in the USA & Canada and UK.

Additionally, acquiring MPS Group enhances Adecco's Managed Service Program (MSP) and Recruitment Process Outsourcing (RPO) offering through MPS Group's leading technology platform (Beeline). Together, both companies will become the leading provider of MSP and RPO services and technology solutions. The flexibility to offer services, technology or combined programs is increasingly becoming a strategic advantage within the HR industry as clients seek to outsource HR processes and to streamline their supplier relationships.

Adecco expects the transaction to be accretive on an adjusted EPS[3] basis in the first year after closing. The acquisition will be EVA[4] positive within three years, in line with Adecco's value based strategy and financial discipline.

The combination of Adecco and MPS Group offers attractive synergy potential through optimisation of the combined footprint and operational / back-office functions, efficiency improvements, and elimination of public company costs. Adecco expects to achieve EUR 25 million of annual synergies from the integration of MPS Group within two years, representing approximately 0.5% of the pro-forma 2008 revenues of the USA & Canada and the UK. Integration costs are expected to amount to approximately one times the annual synergies.

MPS Group's board of directors unanimously recommends Adecco's proposed offer to its shareholders. MPS Group's expertise in professional staffing is highly valued by Adecco and management is excited by the infusion of talent MPS Group will bring to the Adecco Group. Adecco is also strongly committed to pursue a multi-brand strategy including MPS Group's portfolio of leading professional staffing brands.

Details of the transaction
Under the terms of the acquisition agreement, it is proposed that MPS Group shareholders will receive USD 13.80 in cash for each outstanding MPS Group share the 'Offer', representing a premium of 24% to the closing share price of USD 11.14 on October 19, 2009 and a premium of 27% to the volume weighted average share price of USD 10.87 over the 30 days through to October 19, 2009. On an enterprise value basis, the Offer is EUR1 782 million, representing an enterprise value/revenue multiple of 0.5x based on MPS Group's 2008 revenues and an enterprise value/EBITDA multiple of 9.9x based on the average EBITDA over the last five years.

The transaction will be financed by Adecco's current cash resources as well as existing financing capabilities. Adecco is strongly committed to retain an investment grade rating. The transaction remains subject to the MPS Group shareholder vote and regulatory approvals. It is expected to close in the first quarter of 2010.

Q3 2009 Market Update
Adecco's trading in the third quarter of 2009 has developed fully in line with Adecco management expectations. Over the course of the third quarter market conditions improved. Adecco will report Q3 2009 results on November 5, 2009 at 7 a.m. (CET) 6 a.m. (GMT).

Closing of the acquisition of Spring Group plc
Adecco today also announced the successful closing of the acquisition of Spring Group plc.

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