British Rival Makes Surprise Offer for Manpower Temporary Jobs Firm
A British company made a surprise bid Tuesday to buy Milwaukee-based Manpower, the world’s largest temporary employment service company, for $1.2 billion cash.
Blue Arrow, an employment services company about one-tenth the size of Manpower, offered to purchase all of Manpower’s 16 million shares of outstanding stock for $75 each. The news sent Manpower’s stock soaring to close at $78 a share, up $15.625, on the New York Stock Exchange.
Late Tuesday, Mitchell S. Fromstein, Manpower’s president and chief executive, said in a telephone interview that the offer had come as “a total surprise.” He said he had met with representatives of Morgan Stanley, Manpower’s investment banker, but “we haven’t come up with any conclusions.”
If he and the financial advisers conclude that Blue Arrow’s offer is inadequate, Fromstein said, “I suppose there’s plenty of time for hostility.” He added that a “wide variety of alternatives” will be considered before any decision is made.
Fromstein also confirmed what Blue Arrow had said earlier Tuesday in a filing with the Securities and Exchange Commission: that its chairman, Antony G. Berry, had telephoned Fromstein from London late Monday to inform him of the tender offer and of the British firm’s desire for a friendly combination.
Berry is to arrive in the United States from London late Thursday, but he reportedly is not scheduled to meet with Fromstein.
Analysts generally viewed the Blue Arrow offer as unexpected and too low. Some said Manpower should be worth about $90 a share.
Judith Scott, an analyst at the investment firm of Robert W. Baird in Milwaukee, said: “I think it’s a big surprise and I would guess it is viewed as hostile. My own feeling is that it (the price) is not enough. This company has a fantastic franchise and is in one of the fastest-growing types of industries.”
Gerald S. May, an analyst with the Paine Webber financial firm in New York, said: “Where we are now is, the market is saying the bid’s too low.”
Blue Arrow, which describes itself as Britain’s largest private sector employment services company, disclosed in its SEC filing that it already owns 125,700 shares, or 0.8%, of Manpower. The shares were reportedly purchased on the open market at an average price of $60.25 each.
Expanded Last Year
Blue Arrow said in the filing that it was approached in May and June by AMLO, an association representing nine of the 12 Manpower franchisees in Britain. They wanted to know if Blue Arrow might be interested in acquiring them, according to the filing. AMLO reportedly told Blue Arrow that Manpower was aware of their action. Nothing came of the meetings, the filing said.
Blue Arrow began a major expansion program into the United States last year, having snapped up six U.S. employment service firms for a total of $95 million since last October. Those U.S. acquisitions included Temporaries Inc., with revenue of $35 million; Career Employment Services, with revenue of $90 million; Positions Inc., with revenue of $10 million, and Richards Consultants, an executive recruiting firm with revenue of $8 million.
In the worldwide temporary help business, Blue Arrow is a minnow attempting to swallow a whale.
Blue Arrow, which plans to raise the money to buy Manpower through a stock offering, had net income of $7.9 million and revenue of $160.2 million in the fiscal year that ended Oct. 31. Manpower had a profit of $31.1 million on revenue of $1.21 billion in the fiscal year that ended Feb. 28.
Battling Kelly Services
Manpower has more than 1,337 branches and licensed offices in 33 countries, including the United States, Britain, Japan and France. It supplies temporary employees with skills ranging from technical and professional specialists to unskilled laborers and word- and data-processing workers.
In the United States, where it earns about half of its revenue, Manpower runs neck and neck with Kelly Services for the No. 1 position. Analysts said each company has about 11% to 12% of the U.S. temporary help market. According to the National Assn. of Temporary Services, Manpower has 655 owned and franchised offices in the United States to Kelly’s 638.
Manpower’s Fromstein, 59, a former advertising man, has run Manpower since 1976, when Parker Pen Co. acquired the temporary help company from the Winter family of Milwaukee. Manpower’s profits then supported the ailing pen business.
Fromstein became president of Parker Pen in early 1985 and within a year had sold off the writing instruments business to some of Parker’s European managers.
MANPOWER AT A GLANCE The Milwaukee-based firm is the world’s largest temporary employment agency.
3 mos. Year ended Feb. 28 May 31 1987 1986 1985 Revenue (millions) $356 $1,210 $897 $844 Net income (millions) 9.2 31.1 22.0 5.4
Assests $252 million Employees 4,000 Shares outstanding 16.1 million 12-month price range $33.50--$78 Tuesday close (NYSE) $78, up $15.625 TOP U.S. TEMPORARY EMPLOYMENT FIRMS Number of U.S. offices (company-owned and franchised) in 1986. Manpower 655 Kelly Services 638 Olsten Corp 342 Personel Pool of America 300 Adia Services 224 Source: National Assn. of Temporary Services, Alexandria, Va.
