Adecco's acquisition of Olsten Corporation: bidding strategy and board persuasion

Staffing Merger

Adecco/Olsten Merger

Though Olsten is seeking a minimum price of sixteen dollars per share for the acquisition of its staffing services by Adecco -- a price nearly double the current market value of the company's shares -- the amount of debt that the company is carrying and the restructuring that will need to be involved to effectively and efficiently incorporate the company into Adecco's operations does not warrant such a high price. With the stock currently trading at around $8.75 per share and given the other constraints and realities of the situation, Adecco should make an offer of $12 per share for the firm. This provides an extra incentive to Olsten shareholders to sell, as it presents a substantial premium over the market value of each share of Olsten stock, while at the same time minimizes costs to Adecco such that more capital can be used to pay down the debt that will be acquired and to facilitate the spin-off of Olsten's healthcare services and the other transitions that will need to be made as a part of this merger. This price is more than reasonable given the current financial status of Olsten, and though there is a competing offer on the table Adecco's is far more likely to lead to long-term success and progress for the bulk of Olsten's employees and its half-century-old endeavors. This will need to be argued before Olsten's board to achieve agreement.

Far more than the other competitor, Adecco can ensure the continuation of the family-run Olsten even if the company falls under a new corporate umbrella, while a failure to sell to Adecco could mean the complete folding of the company or its purchase at a later date for a greatly reduced price. Adecco and Olsten also have similar company cultures and would be more easily integrated than Olsten and the competing firm, and the operational and geographic splits between the company would actually serve as strong complements to each other -- regional consistency could be achieved, and the newly-merged company would have a much greater spread and market share in the North American market (particularly in the United States). All of this means that the buylk of Olsten's staffing employees and managers could continue to perform their tasks and would actually be more effective and more efficient in the carrying out of their duties and servicing clients. Greater market share and efficiency would also be achieved in Eruopean markets, and Olsten's reach would be greatly extended once it is incorporated into Adecco. Administrative costs would also be greatly reduced due to the similarity in operations between the two firms and the sharing of clients that would be the natural result of this merger.