Staffline, the AIM quoted recruitment, training and outsourced human resources business, has completed the acquisition of Fourstar Employment & Skills Ltd for £3 million in cash. Fourstar is a Midlands-focused contractor to the UK government specialising in the welfare to work market and has been a Flexible New Deal provider in the Birmingham and Solihull area since October 2009. Following the replacement of that programme with the Work Programme under the new government, the company has been awarded preferred bidder status for a new five year contract from July 2011 in the same package area with additional expansion into the Black Country. The Staffline share price responded with rise of 15p to 193.5p.

Staffline said the acquisition would give it early stage access to the temporary workforce in the Midlands region. The new business will sit autonomously alongside Staffline’s other core expertise of national outsourced job placement and training. The company said it expected the deal to act as a springboard for participation in other similar government initiatives and said that many synergies could be utilised between it and the existing core Staffline businesses.

Separately, Staffline said that trading in its core business had been ahead of budget during the first quarter of 2011 although it insisted that it was too early to draw firm conclusions about the year as a whole. In February, the company reported revenue growth of 79% to £206.2 million in the year to December 2010, with pre-tax profits up by 100% to £7 million. The company pulled off three acquisition last year and has already snapped up recruitment agencies Kelburn Industrial and Ethos Recruitment since the start of 2011.

Fourstar is being acquired using existing cash resources from the Dutch company Fourstar Group Ltd, which is owned by Lern Holding B.V. In the year ended 31 December 2010 Fourstar generated an unaudited net profit of £3.6 million, which included a significant early termination payment from the DWP in relation to the ending of the Flexible New Deal programme. The acquisition is expected to generate approximately £90 million of revenue over the next five years, be earnings neutral in the first full year of ownership and earnings enhancing thereafter.

Under the Department for Work and Pensions (DWP), the Work Programme is aimed at helping people who have been claiming unemployment benefits for 12 months or more or those claiming employment support…

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