SYDNEY: The GO2 People Ltd has entered into a Share Purchase Agreement to acquire all of the shares in leading WA-based Employment Services provider Skill Hire Australia Pty Ltd.
The transaction aligns with the Company’s previously stated strategic plan to add high quality businesses to its portfolio under the GO2 umbrella, and its continued focus on earnings and cash flow to drive shareholder value.
Skill Hire is one of Australia’s leading Employment Services providers. It brings together the benefits of a Registered Training Organisation, an apprenticeship & traineeship recruitment business, and an employment agency to empower people towards gainful employment.
Leveraging an excellent reputation and a strong presence across Western Australia and South Australia, Skill Hire delivers services to a loyal client base which includes a number of Australia’s leading companies. Skill Hire offers a wide range of training courses and qualifications that span a number of different industries, including pre-employment programs, apprenticeships and traineeships.
Skill Hire delivers highly regarded Government funded training in addition to fee for service training, with revenue generated via both business-to-business and business-to-consumer models. Skill Hire also offers blue collar labour hire services to their clients.
The strategic acquisition of a highly synergistic business such as Skill Hire will provide a number of key benefits to the GO2 group that will drive shareholder value whilst providing a platform for future growth.
The core business model of both businesses, being training and employment, is heavily geared towards the re-training and re-deployment of a national workforce impacted by the Covid-19 pandemic, and addressing significant skills shortages in the resources and building & construction sectors.
The transaction is significantly earnings and cash flow accretive, with Skill Hire reporting unaudited revenue of $23 million and EBITDA of $1.6 million for the half year to 31 December 2020. Given the operational synergies between GO2 and Skill Hire the merged entity will see immediate cost rationalisation opportunities, which are expected to be in excess of $500k on an annualised basis.
Skill Hire’s founders Robert Stockdale and Tony Fitzpatrick will join the Board of GO2, and the company also intends to recruit an additional Non-Executive Director prior to the 2021 Annual General Meeting.
Furthermore, GO2’s recently acquired permanent recruitment business Hunter Executive is also expected to benefit from the group’s enlarged client base, geographical footprint, and a wider range of service offerings to cross-sell to clients. Importantly, and with an eye to 2022 & beyond, the merged entity will utilise the integration period to develop its strategy for future growth.
The GO2 People Managing Director, Billy Ferreira, said: “We are delighted to have reached an agreement to acquire Skill Hire. This is a merging of two very similar businesses – operationally, geographically and culturally. Skill Hire not only brings an extremely attractive business model which will enhance the GO2 group’s capability, but also brings significant earnings which will immediately drive shareholder value. Collectively, we’re excited about the future as a merged entity and the synergies that can be achieved within the next 12 months, including significant cross-sell potential, scalability and cost rationalization – all of which will drive improved earnings, cash flow and further shareholder value.”
Consideration includes a combination of:
The issue to Skill Hire’s current shareholders of that number of shares which will represent 50% of the issued capital of the Company following issue, ignoring unexercised options with an exercise price above 20 cents;
$6,250,000 in cash (“Completion Payment”), to be paid to the current Skill Hire shareholders from Skill Hire’s cash balance on completion; and
The Company paying a deferred cash payment of $3,250,000 to the current Skill Hire shareholders, payable no later than 24 months following completion and with interest accruing at the rate of 8.0% per annum on the amount outstanding from time to time, with early repayment in whole or part at GO2’s election.