Directors of workforce enabler Konekt Group (ASX: KKT) recommend shareholders accept an acquisition deal proposed by Advanced Personnel Management (APM) which is set to enhance its ability to provide its range of services for companies, including integrated employment placements, workplace injury management and workplace health solutions.
In a statement to the market this morning, Konekt said it has entered into a scheme implementation deed with APM, under which the human services organisation will acquire the entirety of Konekt’s shares for a cash price of $0.49 per share – a significant premium to yesterday’s closing price of $0.29 per share.
APM claims to have “assisted” more than 1 million Australians since 1994 and operates a range of programs in 10 countries that deliver allied health, assessment services, psychological intervention, employment assistance, vocational rehabilitation and community-based services on behalf of governments and private clients.
Over the past year, APM’s global team of more than 6,000 employees has enabled better lives for more than 350,000 people around the world, the company said.
The “complementary” merger intends to create a range of synergies for the new entity with APM chief executive officer Michael Anghie referring to the pair’s “collegial relationship, mutual respect and an alignment in our purpose of enabling better lives” as the inspiration for the deal.
The deal must still be ratified by several parties including obtaining consent for the change of control resulting from the scheme in relation to particular government contracts, regulatory approvals, there being no material adverse change, regulated event or prescribed occurrences and Konekt shareholders approving the scheme.
Moreover, APM must still receive approval from Australia’s Foreign Investment Review Board and confirmation from an independent expert that the scheme is fair, reasonable and in the best interests of Konekt shareholders.
Offer on the table
Compared to the company’s share price six months ago, the proposed deal would deliver a 162% premium to shareholders.
Konekt currently employs over 700 staff across 107 branches nationwide. Its primary focus is helping organisations, individuals and government to maximise workforce participation and productivity, and minimise the impact of workplace injury.
The company claims to be able to “minimise workplace costs” which leads to improved outcomes in terms of increased worker participation, reducing worker’s compensation premiums and creating “safer workplaces”.
In addition to its roles as a New Enterprise Investment Scheme and Disability Employment Services provider, its business units include leading jobactive Konekt Employment. The company also has a Konekt Workcare brand, which assists injured workers returning to the workforce.
“Konekt and APM have aligned visions and values in the services we provide and represent an ideal partner for our business. This transaction enhances Konekt’s vision to maximise workforce participation,” Konekt chief executive officer Damian Banks said.
In a further incentive for Konekt shareholders, APM has also proposed to pay a fully franked special dividend of up to $0.05 per Konekt share, with the scheme consideration of $0.49 per Konekt share to be reduced by the special dividend amount, in the event of all parties agreeing.
According to Konekt, the fully franked special dividend is “expected to be paid shortly prior to the implementation of the scheme”, currently pencilled in for mid-December 2019.
Konekt directors collectively hold around 23% of the company’s shares and have already “unanimously recommended” that Konekt shareholders vote in favour of the scheme next month.
Konekt shares were trading 67% higher closer to the offer price at $0.485 per share in morning trade.