ABC buys 123
ABC Learning acquires a recruitment company in order to mend a botched deal that created fee leakage of millions.
It might be tempting to speculate that Eddy Groves managed to achieve one more purchase before he took leave of ABC Learning Centres today, but the acquisition of 123 Careers appears more about cleaning up a mess than hinting at expansion.
ABC will pay $70 million for 123, which has been providing the recruitment services for the 1,100 childcare centre network. ABC had sold the recruitment rights to 123, but apparently the deal had been costing ABC a fortune.
The childcare company is in the process of dismantling the labyrinthine structure of the group, which had each centre operating as a separate company.
The contract with 123 was apparently so inefficient that staff were unable to switch from one centre to another, more temps were recruited than permanent staff, and it was proving to be very expensive.
Indeed, according to ABC, 123 was pulling in $90 million of revenue, presumably all from ABC. The company estimates the purchase will allow it to significantly reduce the cost of hiring staff and access a pool of employees it could not do under the previous system.
123 is reported to have been established by ABC's former COO Jillian Reynolds, but ownership was then passed on to Don Jones, a former Lt Colonel in the army who entered the childcare services business in the 1990s.
ABC was unable to confirm this fact this afternoon. "It's a privately held company and we bought it from the owner,” was all that one of the spokespeople was able to offer.
Ernst & Young, meanwhile, continues its investigation of the company accounts. ABC should finally be able to present its fiscal 2008 results, possibly with some restated figures from previous years, sometime in October
ABC will pay $70 million for 123, which has been providing the recruitment services for the 1,100 childcare centre network. ABC had sold the recruitment rights to 123, but apparently the deal had been costing ABC a fortune.
The childcare company is in the process of dismantling the labyrinthine structure of the group, which had each centre operating as a separate company.
The contract with 123 was apparently so inefficient that staff were unable to switch from one centre to another, more temps were recruited than permanent staff, and it was proving to be very expensive.
Indeed, according to ABC, 123 was pulling in $90 million of revenue, presumably all from ABC. The company estimates the purchase will allow it to significantly reduce the cost of hiring staff and access a pool of employees it could not do under the previous system.
123 is reported to have been established by ABC's former COO Jillian Reynolds, but ownership was then passed on to Don Jones, a former Lt Colonel in the army who entered the childcare services business in the 1990s.
ABC was unable to confirm this fact this afternoon. "It's a privately held company and we bought it from the owner,” was all that one of the spokespeople was able to offer.
Ernst & Young, meanwhile, continues its investigation of the company accounts. ABC should finally be able to present its fiscal 2008 results, possibly with some restated figures from previous years, sometime in October
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