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Randstad to Bid $5.17 Billion for Rival Vedior

Dutch staffing company Randstad Holding said Monday it will bid around 3.51 billion euros ($5.17 billion) in cash and shares for peer Vedior, in a management-backed takeover that would create the world's second-largest employment agency.

Randstad's cash-and-share offer was worth 20.19 euros ($29.76) per Vedior share at Friday's closing price, a 64 percent premium over their value as of Thursday. Vedior shares rose more than 30 percent on Friday after news the companies in were talks leaked out.

The Amsterdam, Netherlands-based company would have combined sales of 17.3 billion euros ($25.3 billion) and operating profit of 883 million euros ($1.29 billion), Randstad said in a statement, making it the largest staffing company in Germany, The Netherlands, Belgium, Portugal, Poland, Canada and India.

Adecco of Switzerland would remain larger in the U.S. and overall, despite Vedior's strong position in France, while Milwaukee-based Manpower would slip to third place globally.

The companies said they hoped to strengthen their position at the high end of the staffing market, "given the continued trend of outsourcing of white-collar jobs."

In a joint statement they said their biggest clients were increasingly operating in several markets internationally and "seeking a broader range of services to be offered by a smaller number of vendors."

"The combination will have a unique service offering for large industrial and logistics clients," they said.

"From a geographic perspective, the combination will have leading positions in most of the key staffing markets with additional growth potential from emerging staffing markets."

Randstad said it expected to reduce annual costs by 80 million euros ($117 million) by combining headquarters and offices -- but it would need 60 million euros ($87.8 million) in restructuring charges in order to do so.

It said it did not expect any forced layoffs as a result of the merger, which is expected to close in March or April pending regulatory approval.

The companies said they expected an additional 20 million euros ($29.3 million) in annual tax savings as a result of the merger but didn't elaborate.

Randstad's chairman, chief executive and chief financial officer will retain their jobs in the combined company. Vedior's chief executive, Tex Gunning, will "head the integration team."

After Friday's sharp rise, Vedior shares kept climbing Monday and were up 7.9 percent to 18.35 euros ($27.04). Randstad shares continued to fall on the threat of dilution and were down 11 percent to 28.74 euros ($42.36).