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Employment platform SEEK (ASX: SEK) has formally entered a $41.2 million takeover agreement with Xref (ASX: XF1) that will bring the embattled Sydney-based HR technology platform under the SEEK umbrella.
Xref, which has more than 1.3 million users across 195 countries, revealed on 14 October that it had secured a four-week exclusivity deed with SEEK to acquire all of its shares on issue at 21.8c each.
SEEK announced today that it had entered a scheme implementation deed with Xref, confirming that the 21.8c-per-share offer price is its best and final for the group.
Xref, which specialises in reference and pre-employment checks, employee engagement and exit surveys, has been working with SEEK since June this year after securing a partnership to improve the way reference checks are used in the employment process.
SEEK says the acquisition will address “a clear customer need not currently met in SEEK’s product offering, and more broadly accelerate SEEK’s strategy of enhancing trust in its employment marketplace”.
The Xref board has unanimously recommended that shareholders vote in favour of the scheme, with each of the company’s directors intending to support the proposal in the absence of a better deal.
The acquisition is expected to be funded from SEEK’s existing debt facilities.
The two companies first announced a planned collaboration in January this year, which involved the integration of Xref’s systems with SEEK’s credential verification platform SEEK Pass, formerly known as Certsy.
The integration, which was implemented in June, initially allowed employers using SEEK to request reference checks provided by Xref via SEEK Pass with future phases of the integration prepared to explore other uses of reference checks, such as verifying work history.
In May this year, Xref undertook a strategic review of its business after revealing that it had received enquiries “from a number of parties regarding a potential acquisition of the company”. Several of these inquiries were from private equity firms.
Xref posted a bottom-line loss of $5.49 million in FY24, which was a blowout from the $3.65 million loss recorded a year earlier. Revenue fell 3 per cent to $19.86 million during the year.
Challenging market conditions led the company to implement major changes to its business in FY24, including the closure of its UK operations, a consolidation of its head office and the culling of about 25 per cent of its staff.
Despite challenging market conditions, Xref said at the time that it had “maintained strong levels of customer satisfaction and employee engagement, demonstrating its ability to innovate while balancing costs and short-term cash flow”.
SEEK’s takeover of Xref is expected to be finalised in the first quarter of March quarter of next year.
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