The bid, lodged on December 17, sought to split ownership of the merged company equally between Skilled and Programmed shareholders.

While the proposal valued Skilled at $1.38/share, a premium of around 20%, Skilled’s board was quick to describe it as “opportunistically timed” to take advantage of a recent weakness in its share price.

Skilled’s board has examined the logic of combining the two businesses and says that it is not compelling given Skilled’s “existing strong market positions and stand-alone growth opportunities”.

Skilled wants to build a better business, not simply a bigger one, the company said.

The board said it was not clear that a larger entity would be better positioned than Skilled already was, and that the merger would add scale but not enhance Skilled’s business profile – particularly in the marine services area where it expanded most in recent years.

Skilled said Programmed’s marine business was primarily exposed to the offshore construction segment, while Skilled had diversified exposure across the full oil and gas project life cycle.

“Skilled is already the market leader in blue-collar labour hire in Australia, recognised for the quality of its people and its excellent safety record and customer service. The addition of Programmed’s business would not significantly alter this position,” the company said.

Synergies of $20 million per annum identified by Programmed would take years to achieve, and would come from the removal of duplicate corporate overheads, which would not better position the business for future growth.

Skilled chair Vickki McFadden said the terms of Programmed’s proposal did not reflect the value of Skilled shares and the contribution that Skilled would make to a combined group.

“Skilled has strong and diverse businesses in workforce services and technical professionals,” she said.

“In engineering, Skilled provides specialist operations and maintenance solutions with a good pipeline of growth opportunities. Marine services cover the full project life cycle from exploration to construction, production and decommissioning.

“Skilled’s ability to leverage its capability across the project life cycle positions the business to capitalise on a visible pipeline of more than $1 billion of addressable offshore contract work in the medium-term.”

Around half of that work is in production and maintenance contracts, with drilling rates expected to be stable in the oil and gas space and major mining projects moving into production, increasing the demand for shutdown and maintenance work.

McFadden said Skilled had made the acquisitions of Broadsword and Thomas & Coffey to strengthen its range of marine offerings and further diversify the group over the past two years.

It also identified around $28 million worth of savings during that time, with a further $15 million expected in 2014/15.

She said the company would be better off charting its own course under new CEO Angus McKay, although McFadden said Skilled remained open to any transaction that properly valued the business.