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Frenkel Topping and NAHL call off takeover talks

Stock exchange: Deal presented commercial and integration difficulties

Talks about a reverse takeover of NAHL Group – the owner of National Accident Helpline – by fellow AIM-listed company Frenkel Topping have been called off.

The potential offer was first revealed in September [1] but the date by which Frenkel Topping had to declare its decision was extended three times, until yesterday it announced that it has concluded not to make a firm offer, with the pair agreeing to terminate discussions.

Frenkel Topping had identified NAHL Group’s case manager and rehabilitation operation – which only accounts for a quarter of the group’s turnover – as its main target and said it could lead to the claims management business, associated law firm and conveyancing leads arm, responsible for the rest of the turnover, being sold off.

In a statement to the stock market yesterday, Frenkel Topping said: “Frenkel Topping and NAHL have engaged in constructive and open discussions and a period of mutual due diligence. It has however become apparent that a combination presents certain commercial and integration challenges.

“Therefore, the board of Frenkel Topping believes that other growth and acquisition opportunities are more compelling at this time and in the best interest of its shareholders.

“The board of Frenkel Topping recognises that this is a disappointing outcome but, as a significant shareholder in NAHL, also wishes NAHL the best for the future.”

The board of NAHL said it too “has been unable to conclude a transaction that is in the best interests of NAHL shareholders”.

In an accompanying business update, NAHL said it had ended the 2020 financial year in line with the board’s expectations.

“The group continues to deliver on its near-term strategic focus of producing positive cash flows and reducing net debt.

“Since the Group’s last update, net debt has reduced by a further £0.8m to £16.3m at 31 December 2020 (31 December 2019: £21m).

“Furthermore, the group is pleased to report free cash flow of £6.1m for the year, a significant improvement compared to the previous year (2019: cash outflow of £1.7m). This was achieved through placement optimisation, increased settlements from historical claims and improved cost savings.”

The statement added that the board remained “committed to creating value from the group’s portfolio and will continue to actively review its operations and strategy”.