12 Jul 2016 08:20
12 July 2016
Sale of Kurt Salmon US healthcare business
Sale of the non-core healthcare consulting business will allow MCG to focus on
Kurt Salmon's market leading international retail and consumer goods practice
MCG today announces that it has entered into an agreement for the sale of the healthcare consulting business of Kurt Salmon in the United States to ECG Management Consultants. The cash consideration payable on completion of the sale is expected to be approximately $12.0 million (equivalent to approximately £9.2 million). A further $1 million of consideration is deferred and contingent on post completion performance.
MCG is expected to receive net cash proceeds, excluding deferred consideration, of approximately $10.4 million (equivalent to approximately £8.0 million) after the deduction of estimated transaction costs of $1.6 million (equivalent to £1.2 million). The net proceeds will be subject to tax. MCG will use the net proceeds after tax for general corporate purposes.
The Kurt Salmon healthcare business provides management consulting services to major hospital groups and healthcare organisations throughout the United States. The profit before tax attributable to the Kurt Salmon healthcare business for the year ended 31 December 2015 was £0.7 million (Group: loss before tax £3.7 million). The gross assets of the Kurt Salmon healthcare business at 31 December 2015 were £4.3m, excluding goodwill.
The Kurt Salmon business which will be retained by MCG following the disposal comprises the international consulting practice focusing on clients in the retail and consumer goods sectors, and currently principally operating in the United States, Canada, the United Kingdom, Germany, Japan and China. Kurt Salmon is an established international brand and a leading management consulting firm addressing clients in the retail and consumer goods sector. The Kurt Salmon business which will be retained by MCG represented approximately 80% of the revenues of the continuing operations of Kurt Salmon as a whole for the year ended 31 December 2015.
The business which is being sold does not generate synergies with the larger retail and consumer goods practice of Kurt Salmon and as part of the MCG group its potential for investment is limited. The disposal provides an opportunity for the Group to concentrate on the retained business of Kurt Salmon, which is wholly focused on clients in the global retail and consumer goods sector, and Alexander Proudfoot. The disposal is subject to customary closing conditions, but is expected to complete by the end of July.
The disposal is expected to generate a one-off IFRS loss before tax of approximately £15 million, principally as a result of the write off of goodwill held in the consolidated balance sheet of the Group which will be allocated to the business being sold. The Group profit and loss account will also include non-recurring expenses relating to the disposal, including in relation to the restructuring of certain non-US healthcare consulting operations which are not part of the sale. The Board believes that the disposal will not be accretive to earnings per share. The disposal will strengthen the financial position of the Group by increasing the level of cash resources available to the remaining businesses.
Nick Stagg, Chief Executive, commented:
"The sale of the healthcare practice, which follows the sale of the French and related operations of Kurt Salmon in January 2016, will allow MCG to focus on the Kurt Salmon business serving the retail and consumer goods sector, where it is a market leader, as well as the ongoing recovery in Alexander Proudfoot. MCG is in a strong financial position, debt free, and now well placed to promote profitable growth in its more focused continuing operations."
For further information please contact:
Management Consulting Group PLC | ||
Nick Stagg | Chief Executive | 020 7710 5000 |
Chris Povey | Finance Director | 020 7710 5000 |
FTI Consulting | ||
Victoria Foster Mitchell / Ben Atwell | 020 3727 1000 | |
ECG Management Consultants | ||
Gary K. Edmiston | Chief Executive Officer | 858 436 3220 |
Susan Arnold | Marketing Director | 303-841-7774 |
Notes to Editors
Management Consulting Group PLC (MMC.L) provides professional services across a wide range of industries and sectors.
It comprises two independently managed practices: Alexander Proudfoot and Kurt Salmon, which both operate worldwide. Alexander Proudfoot helps clients to embed disciplined execution in their operations to achieve growth targets, revenue and profit goals. Kurt Salmon provides consulting services to clients in the retail and consumer goods sector. For further information, visit www.mcgplc.com.