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Adcorp has reached agreement to acquire Australian IT recruitment group for R545 million

Adcorp has reached agreement to acquire Australian IT recruitment group for R545 million

JSE listed human capital management group, Adcorp announced that it has reached agreement to acquire the entire issued share capital of Paxus, an Australian market leader in the IT contracting and recruitment industry for AU$ 60 million (approximately R545 million).

Payment for the business will be made in cash to be funded by way of a fresh issue of 13 million Adcorp shares which will be placed with South African financial institutions as well as approximately R252 million debt to be raised in the Australian debt markets.

Started in 1973 with current revenues approximating R3.0 billion, Paxus has offices throughout Australia and has a strong and recognised brand in the specialised, niche IT recruitment and contracting market.

A year ago, Adcorp bought specialised South African IT contracting and recruitment business, Paracon.

“The two businesses are extremely complimentary in that they deal in similar markets in the same niche skills set. As such, the opportunity for these two businesses to work together is significant”, says Adcorp CEO, Richard Pike.

“In terms of size, the nature of the respective businesses, the number of contractors they manage and the type of clients they serve, there are vast similarities and opportunities for cross selling and the exchange of products and ideas between Paracon and Paxus.

Paxus provides IT resources both on a contracting and permanent basis across a wide spectrum of IT specialties and functions including business analysts, project managers, consultants, analyst programmers, testers, and desktop / PC support. With loyal clients, contractors and employees and a corporate focus on operational excellence, Paxus has performed strongly.

“Paxus is a well-established business with a solid financial track record and strong brand name. It has an experienced management team and an excellent reputation. It has long established relationships and preferred supplier status with some of Australia’s blue chip companies as well as various government departments. In addition, the seller of the business, CSC, is currently Paxus’ largest client and will continue to procure IT resources from Paxus in terms of a five year supply agreement between the two companies”, says Pike.

The Acquisition will be earnings enhancing for Adcorp shareholders and will provide greater diversity of risk to earnings given the geographic, client and service line spread it introduces to the Group. Paxus is also highly cash generative in line with Adcorp’s existing business model.

Pike said he expected the integration of the business to be fairly seamless with that of Adcorp’s. He said that Adcorp intended to continue offering employment to all of those employees currently working for Paxus.

“The acquisition offers a great opportunity for the Adcorp Group to expand its offerings in the IT contracting and recruitment space which continues to be a growth sector. The partnership that we have forged with CSC is an exciting one and one that should be beneficial to both parties well into the future”, concludes Pike.


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