Manpower shares drop on news of French probe; Staffing company,
JOEL DRESANG
Manpower shares drop on news of French probe
Staffing company, rivals accused of violating rules on competition
Shares of Manpower Inc. fell Wednesday after the company’s disclosure that authorities in France are investigating whether the Glendale-based staffing company and two of its rivals violated French and European Union rules protecting competition.
Manpower’s stock price fell 87 cents or 1.8% to close at $47.50 in heavy trading, after falling as far as $1.67 earlier in the day. The broader market rallied, sending the Dow Jones industrials up more than 160 points. The major stock indexes recorded one of their best days of 2004.
The company issued a statement after markets closed Tuesday, saying that it is cooperating with the French inquiry and that it wouldn’t comment further. Dutch staffing company Vedior NV and Swiss competitor Adecco SA also acknowledged that they are part of the inquiry.
Together, the three companies control more than 70% of the French staffing market, said Randall Mehl, securities analyst and managing director of the human capital services group at Milwaukee’s Robert W. Baird & Co.
Early Wednesday, Baird sent out an advisory saying that its analysts expect Manpower stock to trade down but recommended buying it because the staffing market is improving and Manpower has had a clean history. The company also is buying its own stock, which reduces the number of shares on the market.
“We don’t know that there’s going to be any effect on anything,” Mehl said. Chief among his concerns is that profit margins could be narrowed if French customers tried using the news to bid down Manpower’s prices.
France accounts for about a third of revenue at Manpower, the world’s second-largest staffing firm behind Adecco. Vedior is No. 3.
Mehl said the three rivals established themselves when the French staffing market began opening up in the 1970s. Last month, they received European Union approval for a joint venture to provide electronic document processing to temporary employment agencies in France.
“The regulatory environment in France for staffing companies has been supportive of the industry. Part of it is because it does help lower unemployment,” Mehl said.
The French government pays staffing firms subsidies for hiring low- income individuals who are out of work, he said.
Mehl compared the staffing market concentration in France to the Big Three automakers in North America.
“It’s a very competitive area,” Mehl said. “The pricing pressures are there.”
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