Page shares dive as Swiss ditch bid

Shares in recruitment group Michael Page plunged by more than 20% today as the world's biggest temp agency Adecco walked away from a potential £1.25 billion takeover bid.

The move came a day after 5000 of Page's typical recruits lost their jobs at Lehman Brothers in Canary Wharf.

Adecco's withdrawal came as a surprise because it had been set a deadline of the end of this month to table a full-blown offer.

The Swiss-based company had indicated it was prepared to make an offer at around 400p a share but that was rejected last month by the Michael Page board after two weeks of intense discussion between the two companies.

Today Adecco revealed it first ap-proached Page in May of this year but had concluded "that it will not be able to agree a combination on terms acceptable to both Adecco and the board of Michael Page at this time".

It added that it still believes a combination of the two groups would have benefited both companies and their shareholders. Now it will concentrate on expanding its existing operations in the US, Europe and Asia while still looking for bolt-on "specialised general staffing companies".

Page shares shot up from 260p to more than 350p when the bid approach was revealed at the start of August, but slipped back since the Takeover Panel imposed its put-up-or-shut-up deadline towards the end of the month.

The London company rejected the tentative bid, saying that it "materially undervalued" the business. At one stage, Page's chief executive Steve Ingham was reported in the Swiss press to have said that if Adecco improved its offer to 600p a share — a staggering 50% increase — he would probably have to say yes to the bid. But he added: "I am only a very small shareholder."

Page's largest shareholders are the usual institutions led by Standard Life, Legal & General, Capital and Morgan Stanley.

Michael Page said last month that pre-tax profits has risen by 22% to £84.1 million in the six months to the end of June on revenues up by 26% at £500 million.

Investec analyst Robert Morton warned his clients that a hostile bid was unlikely to succeed.

He said: "You've got to win the hearts and minds of senior management or the company will implode on you. The main assets walk out of the door every day in this business."