Financial transaction finalized by Adecco Group to fund the acquisition of Akka Technologies
The Adecco Group, a leading global talent advisory and solutions company headquartered in Zurich, Switzerland, has announced a significant move in its financial strategy. The company has issued senior and hybrid notes, and an inaugural subordinated fixed-to-reset rate hybrid bond, in a move that strengthens its investment grade capital structure.
The issuer for all three instruments is the International Financial Services B.V., with the group AG acting as the guarantor. Barclays, BNP Paribas, UBS, and several other banks have been appointed as Joint Bookrunners on the Hybrid Bond issuance and the new notes.
The Adecco Group's current capital structure, after the placement of senior and hybrid notes and the inaugural subordinated fixed-to-reset rate hybrid bond, reflects a solid and resilient profile. This is characterised by a balanced mix of equity and debt, a strategy that supports stable credit ratings.
This approach is typical in investment grade corporate capital structures, which often include senior unsecured bonds, hybrid notes, and subordinated fixed-to-reset rate bonds. These instruments contribute to a robust Tier 1 and Tier 2 capital base, supporting investment grade rating levels.
For instance, Evonik Industries AG, a comparable corporate entity, issued a first green hybrid bond and subordinated resettable fixed rate notes, a structure consistent with maintaining investment grade status by strengthening their capital ratio without diluting equity excessively.
The focus on maintaining a solid and resilient capital structure, with clear leverage targets, is a common approach to ensure investment grade status while enabling shareholder distributions and growth investments. Deutsche Bank's recent CET1 ratio improvement to 14.2% through organic capital generation after note issuances also illustrates this strength.
Coram Williams, CFO of the Adecco Group, stated that the placement of senior and hybrid notes completes a financing package for the acquisition of AKKA Technologies. The AKKA Technologies transaction, expected to close in early 2022, is growth, margin, and earnings enhancing in the first year.
The net proceeds from the new debt issuances will be used, in part, to fund the acquisition of AKKA Technologies. The new notes and the hybrid bond are reserved for institutional investors, with a maturity date of 2082 and 2031, respectively. The Hybrid Bond has a first reset date of 21 March 2027.
The Adecco Group has also placed two tranches of EUR 500 million fixed rate notes, maturing in 2028 and 2031. These issuances will be listed on the main market of the London Stock Exchange.
For further information on the AKKA Technologies transaction, please click here. For investor relations inquiries, contact [email protected] or 41 (0)44 878 88 88. For press office inquiries, contact [email protected] or 41 (0) 44 878 87 87.
The Adecco Group's financial strategy, which involves the issuance of senior and hybrid notes, a subordinated fixed-to-reset rate hybrid bond, and the acquisition of AKKA Technologies, underscores its commitment to a solid and resilient capital structure. This approach, common among investment-grade corporations, includes instruments such as senior unsecured bonds, hybrid notes, and subordinated fixed-to-reset rate bonds, which contribute to a robust Tier 1 and Tier 2 capital base. The future of work, particularly in the industry, finance, banking-and-insurance, and real-estate sectors, may witness similar strategies by businesses seeking to maintain their investment grade status while facilitating growth investments. Institutional investors can consider these new notes and the hybrid bond issued by the Adecco Group, with maturity dates extending up to 2082 and 2031 respectively.
