Consolidation in the European support services market continues
with the announcement that Copenhagen-based ISS has made a recommended
cash offer for RCO Holdings plc.
RCO, formed in 1968 and employing over 7,000 people, provides facility
management and business support services to the public sector, commerce
and industry through its principal trading subsidiary RCO Support Services.
Clients include BBC TV, Glaxo Wellcome and Lloyd's of London.
Operating exclusively in the UK, RCO reported an operating profit before
interest, tax and exceptional items of £2.2m on a turnover of £62.7
million for the year to 1st October 1999.
ISS, which has embarked on a re-engineering programme to transform itself
from the world's biggest cleaning company into an international service
business, will also be acquiring RCO's interest in two healthcare PFI
projects to add to its own activities in this market. ISS has signed five
of the UK's PFI hospital contracts as service providers.
RCO was an original sponsor and founder shareholder, along with Bovis
and Bank of Scotland, in the Catalyst Healthcare Consortium formed in
1995 to design, build, finance, own and service new hospitals for the
NHS. RCO owns 16.6% of the equity in two Private Finance Initiative projects
- the 600 bed Calderdale Hospital in Halifax and the new 450 bed Worcester
Royal Infirmary. It is the nominated provider of non-clinical support
services at the hospitals under long-term operating agreements, which
commence in 2001, and the following year.
ISS's bid is 247p in cash for each RCO share, valuing RCO at around £26.5
million. The offer represents a premium of about 54% to the closing price
of 160.5p on Wednesday. The announcement of a possible offer was made
on Thursday and the shares were trading at 261p on Friday. They reached
a 52 week high of 292p last July.
The offer will be unanimously recommended by the Board of Directors of
RCO but is conditional on valid acceptances for at least 90% of the entire
issued share capital of the company. Undertakings by the institutional
holders will cease to be binding if a competing offer is announced equal
to or above 272p.
Waldemar
Schmidt, Chief Executive Officer of ISS (pictured) said: "We strongly
believe that this offer is in the interests of the shareholders of both
companies. The combination of ISS Europe and RCO creates a strong partnership
and thereby further strengthens our position in the UK multiservice market".
ISS employs more than 220,000 people in 34 countries throughout Europe,
Asia, South America and the Middle East. Total turnover reached DKK 19.8
billion in 1999. If the acquisition goes ahead, the total number of ISS
employees in the UK and Eire would be more than 37,000.
Alan G. Raven, Chairman of RCO, said: "We have thought long and hard
about our future and have concluded that it would be best for the business
to become part of a larger organisation. ISS is a world class company
with excellent credentials which we have known and admired for a long
time as a competitor. We look forward to working with them for the benefit
of our clients and employees."
Richard Byatt
For more information on ISS and RCO visit:
www.iss-group.com
www.rcogroup.com
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