SKILLED GROUP has rejected a merger proposal from Programmed Maintenance Services, saying the terms of the proposal undervalued Skilled and its contribution to a merged group.
The Skilled board said the industrial logic of combining the businesses was not compelling on the basis of the company’s existing strong market position and stand-alone growth opportunities.
The company acknowledged financial synergies from a merger would be around $20 million per year as stated by Programmed, however Skilled said this could take a number of years to achieve and some of these relate to the removal of duplicate corporate overheads.
Skilled recognised a merger would create a larger presence in some industry sectors and provide further diversification, but isn’t sure the business would be better strategically positioned.
Skilled chairman Vickki McFadden said “The terms of Programmed’s proposal do not reflect the value of Skilled shares and the contribution that Skilled would make to a combined group.”
In a statement, Programmed chairman Bruce Brook said the company remained open to discussions with Skilled and were convinced of the logic for the merger.
“A number of independent analysts have assessed the merger terms as reflecting the approximate earnings contributions of both companies. The proposal is not about the past, it is about the future,” he said.