The ReThink Group plc Announces Acquisition of Berkley Recruitment (Group) Limited
The ReThink Group plc Announces Acquisition of Berkley Recruitment (Group) Limited and Directorate change
The ReThink Group plc (AIM: RTG), one of the UK's leading recruitment and professional services companies, announces the acquisition of the entire issued share capital of Berkley Recruitment Group Limited ("Berkley"). The initial consideration is 2.65 million (equivalent to approximately 2.34 million) with additional deferred consideration of up to 4.125 million dependent on the aggregate EBITDA achieved by Berkley and its subsidiaries in the year ending 31 December 2011 ("the Acquisition").
In keeping with ReThink's philosophy of sharing equity with its business leaders, the senior management of Berkley will have an initial aggregate 7.85% interest in ReThink, following the payment of the initial consideration, which is expected to increase following the satisfaction of the deferred consideration.
In conjunction with the Acquisition, the Company has appointed Stephen Greenwood and Fergal Brosnan as executive directors of the Company with immediate effect.
Overview of the Berkley Group
Berkley, which was founded in 1995 and services the European and APAC regions currently employs 30 people in Dublin, Cork and Singapore.
Berkley is recognised as a leading provider of resourcing and outsourcing services, specialising in the Pharmaceutical and Life Sciences, Technology and Commercial recruitment sectors and consultancy services in the Engineering sectors. Its recruitment services range from the supply of Contract and Permanent staff, Interim and Executive Search, as well as the provision of Recruitment Processing Outsourcing/Managed Service solutions.
The audited accounts for the year ended 31 December 2010 show EBITDA of 479,000 and a profit before tax of 410,000 on turnover of 5.6 million. The audited net assets of Berkley as at 31 December 2010 were 645,000.
ReThink's stated strategy is to expand internationally and into other, high value, professional services sectors. The merging of the ReThink and Berkley operations increases the Companies geographic spread and diversifies revenues.
Berkley services clients across Europe and Asia and their strategic plan mirrors that of ReThink. Berkley's strong track record in Pharmaceutical and Life Sciences brings new sectors to the enlarged Group.
Terms of the Acquisition
Berkley is being acquired by ReThink Acquisitions Limited ("RAL"), a newly formed, wholly-owned subsidiary of ReThink. Under the terms of the Acquisition Agreement, the initial consideration comprises 1,425,000 in cash, 250,000 satisfied by the issue of 250,000 nominal of 3.6 per cent. 2013 redeemable preference shares in the capital of RAL ("Preference Shares") and 976,471 satisfied by the issue of 7,946,055 ordinary shares of 0.1p each in the capital of the Company ("Rethink Shares").
Additional consideration, up to a maximum of 3,875,000, will become payable dependent on the aggregate EBITDA achieved by Berkley and its subsidiaries for the year ending 31 December 2011 as follows:
From 0 to 499,999
1 for every 1 of EBITDA
From 500,000 to 999,999
500,000 plus 2.25 for every 1 of EDITDA over 500,000
From 1,000,000 to 1,349,999
1,730,000 plus 2.04 for every 1 of EDITDA over 1,000,000
From 1,350,000 to 1,650,000
From 1,650,001 to 2,000,000
2,750,000 plus 2.25 for every 1 of EDITDA over 1,500,000
The additional deferred consideration will be payable as to 40.91 per cent. in cash, 30 per cent. in ReThink Shares (to be issued at a price of 0.1038 per share) and 29.09% in Preference Shares.
In addition, deferred consideration of 0.33 nominal of Preference Shares will be payable for every 1 of aggregate EBITDA achieved by Berkley and its subsidiaries in the year ending 31 December 2011 over 500,000 up to 1,250,000.
The vendors of Berkley have undertaken not to dispose of any ReThink Shares issued pursuant to the Acquisition until after the first anniversary of completion of the Acquisition, save in the event that any director of ReThink sells up to 15 per cent. of their holding in which case the vendors can may sell the proportion of their respective holding.
Following completion of the Acquisition, Steven Greenwood and Fergal Brosnan will hold 4,119,235 and 2,746,157 ReThink Shares, representing 4.07 per cent. and 2.71 per cent. of the enlarged issued share capital of ReThink, respectively.
Application will be made to London Stock Exchange for the admission of 7,946,055 ReThink Shares to trading on AIM and dealings in such shares are expected to commence on 24 June 2011. Following the issue of these shares, there will be 101,169,387 ReThink Shares in issue.
Further details on Stephen Greenwood and Fergal Brosnan, as required under the AIM Rules for Companies, are set out below.
Commenting on the Acquisition, Jon Butterfield, Chief Executive of ReThink said:
"This acquisition marks a significant step in our growth strategy, increasing our geographic coverage whilst simultaneously driving expansion in to other high value recruitment markets. Berkley operates in markets that complement the existing ReThink operations and has a presence in sectors we have identified as offering exciting opportunities.
"I have known Berkley for some time and have been impressed with their professionalism and quality. I am delighted to welcome the high calibre management and employees to ReThink and confident that they will add considerably to our future growth".
Commenting on the Acquisition, Stephen Greenwood, Director of Berkley Group said:
"We are delighted to be joining forces with The ReThink Group and extremely positive about the strategic fit and alignment with the Berkley brand. The new combined entity will extend Berkley's reach into other geographic markets such as the UK and the Middle East and provide scale and support to Berkley's European and Asian operations. Both Fergal Brosnan and myself are looking forward to joining the board of The ReThink Group and to being part of a significant period of growth."