Allsec, Quess Corp announce merger; shares rise up to 12%

The boards of outsourcing solutions provider Allsec Technologies and business service provider Quess Corp, during their meetings on June 22, have approved a scheme of amalgamation to merge the former into the latter, a joint statement announced on Thursday.

Following the announcement, the Allsec Technologies stock reached an intraday high of ₹482.45, marking a rise of 11.94%. The Quess Corp stock also rose 4.32% to ₹642.9 against the previous close of ₹616.25.

In an all stock deal, minority shareholders of Allsec will receive equity shares of Quess in a 0.74:1 ratio, where they will receive 74 shares of Quess for every 100 shares held in Allsec. Shareholding of Quess in Allsec will be cancelled on merger. According to the scheme of amalgamation, public shareholders of Allsec will hold around 2% stake in Quess.

Post merger, all subsidiaries of Allsec will become subsidiaries of Quess. The deal will be tax neutral for Allsec and Quess, the statement reads.

The merger is subject to the approval of the respective shareholders and creditors of Allsec and Quess, stock exchanges, markets regulator Securities and Exchange Board of India (SEBI), the National Company Law Tribunal (NCLT) and other regulatory authorities. Till the merger becomes effective, Quess and Allsec will continue to function independently.

The merger is expected to be consummated a year from the date of announcement, i.e June 23, 2023.

“The combined entity (post-merger) will mean a larger organization with expanded offerings available to take to the market. The combination would allow to attract and retain talent given additional opportunities opening up in the combined entity. Further, it will reduce statutory compliance requirements,” the joint statement reads.

“The combined entity, due to its strong balance sheet, would be able to participate in large customer RFPs, the companies say. The combined entity would leverage the existing domestic CLM capabilities of Quess and expand its service offerings in the international market. Further, it would assist the combined entity to scale up faster and grow exponentially in tier II cities using Quess infrastructure,” it adds.

The companies expect the merger to result in robust human resource outsourcing services. “The combined entity would be able to cross-sell better with integrated offerings single entity approaching the market eliminating layers. Further, the target customer contacts for HRO business and Quess staffing would be common (HR vertical). Allsec’s HRO and compliance business along with Quess services would form a formidable outsourcing suite for large organizations.”

The merger will open more geographies for Allsec, given Quess’ strong presence in the Middle East and South Asia.