The GO2 People (ASX:GO2) to acquire Skill Hire Australia

• The GO2 People (GO2) has entered into a share purchase agreement to acquire WA-based employment services provider Skill Hire Australia
• GO2’s latest acquisition is pegged to bring about a number of key benefits, driving shareholder value and creating a platform for future growth
• Under the deal, which does not require a capital raise, a consideration component will be paid out of Skill Hire’s pre-acquisition cash balance
• This includes the issue of shares to Skill Hire shareholders at an exercise price above 20 cents, which will represent 50 per cent of GO2’s issued capital
• The consideration will also encompass a $6.25 million cash completion payment and a deferred cash payment of $3.25 million to current Skill Hire shareholders
• Skill Hire founders Robert Stockdale and Tony Fitzpatrick will join the GO2 board, with the company looking to recruit another non-executive director before its annual general meeting this year
• The GO2 People shares have soared 40.5 per cent to trade at 5.2 cents each

The GO2 People (GO2) has entered into a share purchase agreement to acquire WA-based employment services provider Skill Hire Australia.

The GO2 People offers recruitment and training services to a variety of industries in Australia. Both companies are geared towards the retaining and redeployment of a national workforce impacted by COVID-19.

According to GO2, this latest acquisition will bring about a number of key benefits for the company, both driving shareholder value and creating a platform for future growth.

The agreement, which is subject to shareholder approval, will not require a capital raise, with the issue of new shares to Skill Hire vendors set to match GO2’s current issued capital.

The deal’s cash consideration component will be paid out of Skill Hire’s pre-acquisition cash balance.

This includes the issue of shares to Skill Hire shareholders representing 50 per cent of the company’s issued capital following issue, ignoring unexercised options, with an exercise price above 20 cents.

The consideration also encompasses a $6.25 million cash completion payment and a deferred cash payment of $3.25 million to Skill Hire’s current shareholders.

Shares issued as part of the transaction, in addition to GO2’s founders’ shares, will be subject to escrow for between 12 to 24 months.

GO2 says the agreement will be significantly earnings and cash flow accretive, with Skill Hire reporting unaudited revenue of $23 million for the half year to December 31, 2020.

Further, given the two companies’ existing operational synergies, GO2 expects the merged entity to see immediate cost rationalisation opportunities in excess of $500,000 on an annualised basis.

The GO2 People Managing Director Billy Ferreira said he is delighted at the company’s agreement to acquire Skill Hire.

“This is a merging of two very similar businesses — operationally, geographically and culturally,” he said.

“Skill Hire not only brings an extremely attractive business model, which will engage the GO2 group’s capability but also brings significant earnings, which will immediately drive shareholder value,” Billy continued.

“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 a cost rationalisation.”

Skill Hire founders Robert Stockdale and Tony Fitzpatrick are also set to join GO2’s board, with the company seeking to recruit an additional non-executive director before its annual general meeting this year.

Looking forward, the GO2 plans to utilise the integration period to develop a strategy for future growth.

Following Wednesday’s announcement, company shares have soared 40.5 per cent to trade at 5.2 cents each at 2:28 pm AEDT.