South African Paracon expands business
IT recruitment company Paracon is expanding through the acquisition of IC Blue Technologies' resourcing business, for R20.7 million in shares and cash.
Mireille Levenstein, group FD, says the acquisition will increase Paracon's exposure to parastatals, especially in Gauteng, where it is not currently strong. IC Blue provides IT resources and services in SA, as well as contracting and permanent placements. Mainly blue chip and parastatal clients, mostly in the Gauteng and Cape Town regions, represent its client base.
IC Blue will also give Paracon the potential to grow its market share in Cape Town and Gauteng, because of IC Blue's client base and geographic spread. Paracon will gain access to a larger client and contractor base from IC Blue.
Levenstein says Paracon will be able to offer its clients an extended database of candidates, and will also have access to a broader client base with which to work. IC Blue also bolts in nicely with Paracon's existing business, she says.
The deal, which became effective at the start of the month, will cost R10.5 million in cash, with the balance to be paid in 9.3 million Paracon shares, at R1.10 a share. Paracon also expects to inject about R7 million in working capital into the company.
Levenstein says the company will not be earnings enhancing for the first year, but, as soon as synergies in areas such as shared services and property start coming through, the acquisition will add to earnings.