Shares digital

Trading in the shares of staffing resources specialist Multi Group (MLT:AIM) was finally restored last week after months of acquisition negotiation. The stock was suspended at 1.2p in November when the company first revealed that it was in talks over a possible deal. Having finally come to an agreement, Multi unveiled that it will buy Dream Group for up to £5.5 million in what will constitute a reverse takeover.

Dream provides specialist outsourcing and recruitment solutions to the law enforcement, education and healthcare sectors. Multi, which has a market value of just £3.2 million, plans to consolidate its shares on a 100-for-1 basis, then raise £4 million before expenses through a placing of 16 million new shares at 25p. Having re-started trading at 0.5p, the implied 50% discount of the fundraising suggests Multi would have otherwise struggled to raise the necessary new cash. The shares have since bounced back moderately to 0.7p.

The new money will go toward funding the expansion of the combined companies’ outsourcing capability and paying down much of Dream Group’s existing debt, as well as for the transaction itself.

Once the deal is completed Multi plans to change its name to Servoca and expects the enlarged share capital of Servoca to list on Aim following shareholder approval at an EGM on 7 June.

The group announced a cost-cutting scheme in February, after it was plagued with losses last year, mostly due to the underperformance of its most recent acquisition, Global Medics.

Shares says: Has a lot to prove to investors, who will want to watch closely to see if recent decisions pay off. Hold