The listed company that owns NewLaw Solicitors is to acquire a fleet accident management group that itself has a joint venture alternative business structure (ABS) with NewLaw.
Redde has agreed to acquire the FMG group of companies for approximately £43.2m, subject to Financial Conduct Authority and Solicitors Regulation Authority approval.
The FMG Group – which formed its ABS with NewLaw in April 2013 – undertakes outsourced fleet management, specialist rapid response and recovery management, fleet risk management and legal services. Its customers comprise leasing companies, fleet insurers and brokers, daily vehicle rental companies, direct fleets, blue light organisations, local councils and the Highways Agency.
Redde’s share price rose 2% on the news, continuing a successful year that has seen it increase from 59p 12 months ago to 148p this morning.
In a statement to the stock exchange, Redde said the deal would broaden its accident and fleet management capabilities and allow it to enter additional industry sectors.
“Redde will also be able to widen its appeal to the owners and managers of large vehicle fleets requiring accident management and legal services as part of a long-term customer development plan.”
Unaudited management accounts for the nine months ended 30 June 2015 indicated that the FMG Group achieved an EBITDA (before exceptional costs) of £3.8m on sales of £69.2m in that period, with net assets of £21.6m on a debt free basis.
Redde said “the acquisition is expected to be immediately earnings enhancing and cash generative”.
Martin Ward, chief executive of Redde, said: “The addition of FMG to the Redde group supports our strategic objective of growing earnings on a sustainable basis and broadening the scope of services we offer which are related to our core businesses.
“FMG is a quality business and has a strong reputation in its fields of business for serving its customers well. We have worked together in the legal services arena for a number of years and this acquisition is a further step in strengthening Redde’s proposition to its customers as we build on our recent successes.”
NewLaw has three other joint venture ABSs – with insurer Ageas and specialist motorcycle insurance brokers H&R Insurance and Carole Nash – and Redde said earlier this year that three more were in the pipeline.
Meanwhile, earlier this week the Financial Conduct Authority announced that in the light of the Serious Fraud Office’s decision to launch an investigation into the business and accounting practices at Quindell plc, it has decided to discontinue its own investigation “with immediate effect”.