Temp firms consolidating through mergers

Reuters (Anupama Chandrasekaran) reports: “Merger Pace Picks Up for Temp Firms.”

Buoyed by an improving economy and their rising stock prices, the biggest U.S. staffing companies are back in the takeover game . . . .

For the acquisitive, there’s plenty of choice. There were nearly 7,000 temporary help firms in the United States in 2002, the last year for which figures are available, according to the American Staffing Association. . . .

In 2003, about 110 acquisitions were completed. This is just one-fourth of the deals done in 1998, when mergers and acquisitions in the staffing sector burgeoned, and about half the number of transactions completed in 2000.

But with investors anticipating a revival in the U.S. job market, the stock prices of companies such as Manpower Inc. . . . and Kforce Inc. . . . have jumped to 52-week highs in the last few months.

The higher the stock price, the cheaper it is for staffing companies to buy other employment firms since they can do the deal for fewer shares. Sure enough, Kforce and Manpower didn’t wait to make their moves.

On Dec. 2, Kforce announced the acquisition of Hall, Kinion & Associates Inc. . . . , a California-based provider of staffing to information technology companies. . . .

Quick on its heels, Manpower, the world’s No. 2 staffing company, said it entered into an agreement to buy Right Management Consultants Inc. . . . , an outplacement services provider. . . .

For the survivors, pricing will remain a double-edged sword. The business is so competitive that employment firms can’t charge their clients higher fees to find people to fill their jobs, though operating costs — like health insurance, utilities and other overhead items — keep rising.

If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.

Copyright Employmentblawg Designed by Weblogian