Parity is restructuring its staffing and consulting operations intoart of strategy shift. two separate businesses, preparing the ground for the sale of the agency division.
The move to split the agency business, Parity Resources, from the Parity Solutions consulting unit and have them operate independently under a holding company will be made in conjunction with a 3-for-1 share issue.
Philip Swinstead, chairman of Parity, said: 'This is a restructure that we had to do before considering options for the agency arm. Consultancy and e-commerce will be Parity's main focus and we are looking at whether the agency unit can co-exist with that strategy.'
He added that Parity Resources and Parity Solutions already had a separate management team, strategies and reporting structures so the transition should be completed by mid-year, subject to shareholder approval. Swinstead declined to say when a decision on the future of Parity Resources would be made.
But a source close to the company told PC Dealer the board expects to make an announcement by the end of the year. Swinstead denied the corporate restructure was driven by share price considerations, but conceded that the likely improvement in market capitalisation 'would be an add-on benefit'.
Swinstead added: 'The fact we would claim to have the best staffing agency isn't reflected in shareholder value.'
He said the reorganisation of share capital was designed to improve Parity's liquidity and would also help stabilise its share price.
Roger Phillips, technology analyst at Granville Equity Research, described Parity's corporate restructure as 'something of a public relations exercise to push its consultancy business'.
He added: 'About 60 per cent of Parity's profit now comes from its consultancy business and with its origins as a staffing agency, the company wants to accentuate its move up the ladder.'
Phillips expected Parity to divest the staffing agency within two years, 'subject to it getting an offer it can't refuse'.
But he warned: 'The percentage of profit deriving from the staffing agency would have to dilute significantly before Parity could sell because its overall profit would be hit.'
Phillips also claimed Parity's share price may not rise following a divestiture: 'It is significantly undervalued at the moment and if it becomes a pure consultancy business, that should improve. But Parity's origins in the agency business may still count against it because some analysts say there is no difference between the two.'
An extraordinary shareholders meeting and court hearing will be held in June to sanction Parity's corporate restructure and share reorganisation.
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