Following IT recruiter Spring Group’s confirmation on Wednesday that it had received a proposal regarding a potential cash offer for the company, stockbrokers Collins Stewart has issued a BUY recommendation for the company’s shares.

“We believe that the recent share price underperformance of Spring relative to other staffing companies, and comments by a number of staffing companies that gross profit has stabilised in certain areas, have been the catalysts for an approach to the company, notwithstanding recent large cuts to Spring forecasts,” says the broker.

“We have regularly highlighted the financial strength of Spring. Net cash at December 2008 stood at £40.3m. Owing to declines in its contract business, which have produced working capital inflows, we estimate net cash at June 2009 has risen to £48m (30p per share) and will rise to £51m at December 2009. In addition, at December 2008, Spring had £87m of trade and other receivables on the balance sheet.”

The broker listed several possible acquirers for Spring.

“Adecco has €1bn (£850,000) to spend on acquisitions; it needs a strategy to turn around its underperforming UK business; and its newish CEO (Patrick de Maeseneire) previously worked with Spring CEO (Peter Searle) at Adecco. Hays has spoken about the long-term attractions of expanding its managed services/RPO offering. The Spring management might try to take it private, but could have attempted to do so when the shares were below 30p. Graphite Capital (owners of Alexander Mann – the leading permanent placement RPO business) could also be interested.”

Mergers and acquisitions intelligence service Mergermarket reported yesterday that ET Training, Spring Group’s largest shareholder with a 35.9% stake, was rumoured to be behind the potential bid. (For more on this story, please see the 12 August issue of Recruiter.)

Last night Spring’s share price closed at 51.75p, a 12-month high.