UPDATE 1-Randstad to buy part of USG People's staffing operations

Thu Apr 4, 2013 2:17am EDT

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AMSTERDAM, April 4 (Reuters) - Dutch staffing company Randstad has agreed to buy some of rival USG People's European operations for 20 million euros ($26 million), which will make both companies more profitable, they said on Thursday.

Dutch-based USG People, a smaller rival to the world's second-largest staffer Randstad, has been struggling to improve profitability as its operations suffered from Europe's debt crisis and economic downturn.

USG People does not operate outside Europe.

"The scale of the respective business units is too limited for them to be able to add value," USG People said in a statement.

The sale of its general staffing operations in Spain, Italy, Poland, Switzerland, Luxembourg and Austria, which had a 2012 revenue of 434 million euros, will immediately improve USG People's profitability, the company said.

USG People's general staffing operations include jobs such as administration clerks, drivers and call centre employees.

Specialist staffing services, which help to match employees and employers in sectors such as financial and healthcare, and professional services, which finds jobs for engineers and lawyers, for example, are not part of the deal.

Randstad, which competes globally with world leader Adecco of Switzerland and U.S.-listed Manpower, said in a separate statement that the deal will immediately increase its earnings per share and make it the No.1 player in Spain, Poland and Luxembourg.

The deal, which is subject to regulatory approval, is expected to close in June this year, Randstad said.

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