Staffline completes £34.5m deal for A4E

Δημοσιεύθηκε: 27 Απριλίου 2015 - 13:02

A4E, the welfare-to-work programme provider, has been sold for £34.5m, generating a £20m windfall for founder Emma Harrison, the prime minister's former "families champion".

Staffline Group, the recruitment company, will become the largest provider of the government's £5bn programme to get people back into work after agreeing to buy A4E's shares for £23.5m. It will also assume its £11m net debt.

Joe Brent, analyst at Liberum, issued a buy note and said: "The Department for Work and Pensions has been seeking to consolidate its supply chain and should be pleased that the combined group will be the lowest cost operator. The risk is that continued poor performance by A4E tarnishes Staffline's reputation with DWP, but Staffline has a proven track record of turning around businesses."

Staffline had already bought privately owned Avanta, which runs the work programme service in three regions, for £65m last year. A4E will be integrated with Avanta and rebranded under the name PeoplePlus in the next few months.

The £35m acquisition is being funded by a £27m increase in term loan and an £8m increase in its working capital facility.

The 16 private sector suppliers of the government's welfare-to-work programme have been engaged in a wave of consolidation as they seek to bolster their position ahead of the next round of contracts in March 2017.

Ingeus, Britain's biggest provider of work programmes for the unemployed, was sold to a Nasdaq-listed American workforce development company Provident Service Corporation for $225m early last year.

Andy Hogarth, chief executive of Staffline, said: "This is an exciting milestone in Staffline's growth, considerably expanding the size and geographic reach of our employability offering and will result in the combined business being one of the largest work programme providers in the UK."

The work programme was presented as a model for public service reform when it was introduced four years ago, but has been heavily criticised by the National Audit Office and the public accounts committee.

A4E, which has 3,000 employees, had been struggling since being hit by a series of fraud claims. Six former employees at A4E were found guilty in January of forging documentation to support fraudulent claims to the Department for Work and Pensions and sentenced last month.

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The training company was paid by the government when it successfully placed people in work but staff had instead filed claims for people who had either never been registered for A4E or who had not been found work.

Ms Harrison was forced to step down as David Cameron's adviser on problem families in 2012 after the allegations first emerged that employees at the Sheffield-based company had been faking performance numbers.

She had previously faced criticism for having pocketed £8.6m in share dividends on top of her £385,000 salary and accepting payments of £1.7m for leasing private properties to her own firm.

At the time she was advising the government on some of its welfare reforms. Although Ms Harrison was no longer chairman, she retained an 87 per cent stake in the company that she founded in 1991.

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