CTC:
I was having a chat with my broker Friday, and ASI was recommended. I started looking into it and found nothing really wrong... an ill timed IPO offering for the commercial services component that has since been sold for $850mm(200 million cash due the end of September plus additional $500mm in credit for acquisitions), an 'unfortunate' situation with the chairman's solicitation of a lady in Florida(misdemeanor).... this article (old news)
August 28, 1998 04:32 PM
By Michael Connor
MIAMI, Aug 28 (Reuters) - AccuStaff Inc. cleared away many questions worrying Wall Street with a rich, $850 million deal to sell its Strategix Solutions unit to Ranstad Holdings NV, industry analysts said on Friday.
The rump AccuStaff, a white-collar temporary-staffing group soon to change its name to Modis Professional Services Inc., will focus on the profitable sector for per diem accountants, lawyers, information technologists and finance workers, analysts said.
"Those are the high-growth, high margin end of the business," said Mercedes Sanchez, an analyst with Raymond James. "Over the next 12 months, the stock will be pushing $28-$30."
AccuStaff's shares closed 1 higher at 17 after jumping to as high as 21 at the opening of trade on the New York Stock Exchange.
The Jacksonville, Fla.-based company late Thursday said it was canceling a planned public offering for Strategix and would sell it to Dutch staffing company Randstad in an all-cash transaction.
"(The) sale generates $850 million in cash, relieves IPO concerns, boosts growth rate and improves margins all in one fell swoop," the Standard & Poor's Marketscope stock-analysis service said in a report.
AccuStaff will net $200 million from the deal, according analyst Bernard Picchi of Lehman Brothers.
"They were going into a hostile IPO market and who knows what that would have been like," said another analyst, who asked for anonymity.
With an estimated $1.1 billion in yearly sales, Strategix, and its commercial-staffing businesses fetched a good price, analysts said. The price, as a percentage of sales, was high in comparison to similar recent transactions, Sanchez said.
But AccuStaff still has a big question about one of its own workers, chief executive Derek Dawan, who was arrested in July and charged with soliciting a prostitute in Jacksonville, Florida.
Dawan was scheduled to appear in a Jacksonville court for a pre-trial hearing on September 9. AccuStaff has said Dawan will continue to lead the company and that the charge was not related to its operations.
Sanchez said that AccuStaff, which has bought some 75 small temporary-staff agencies over the last four years, would continue making acquisitions after the Strategix deal closes next month.
((- Miami newsroom, 305-374-5013 or miami.newsroom@reuters.com))
REUTERS
Also, Friday, this trading activity,
09/11/98 RTR BLOCK TRADE - Accustaff 536,800 at 10-7/8
09/11/98 RTR BLOCK TRADE - AccuStaff 200,000 at 10-7/8
09/11/98 RTR BLOCK TRADE - Accustaff 211,000 at 10-3/4
09/11/98 RTR BLOCK TRADE - AccuStaff 2.1 million at 10-3/4
9 strong buys, 4 moderate buys and one hold... book value per share of $8.33 ( I assume that will increase when the sale is completed). PE is 10.9 which is below next years projected growth rate, industry average is 39.8. Price/sales and price/cash flow are about half of the industry average.
All sounds too good to be true, and you know what they say about that scenario. The market has punished small/mid caps and ASI has given them a couple of reasons to be skeptical. That and the general market sentiment of late leaves us at 11.125. Sometimes after a stock has fallen out of favor, no one wants to be the first to test the water. Seems like an ideal time to start a position... unless it is the beginning of tax selling, the chart doesn't seem to have turned yet.
Although it may be on the aggressive side, I think it's a pretty good bet for the mid to long term. At the same time, there are a lot of good companies out there that are down 70% or more from their highs. Lately, I feel like a kid in a candy store... waiting to see if the sale is going to get any better. JMHO
Sorry for the rambling,
Regards,
Roy
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