Slater & Gordon clears final hurdle as FCA approves Quindell acquisiton

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22 May 2015

Grech: transformative transaction

Grech: transformative transaction

Slater & Gordon’s (S&G) £637m acquisition of Quindell’s professional services division has cleared its final hurdle after regulatory approval was granted by the Financial Conduct Authority, it has announced.

With Solicitors Regulation Authority approval already secured, a statement issued to the Australian Stock Exchange last night said this completes the regulatory approval process and the transaction is now unconditional and on track for completion “shortly”.

S&G’s group managing director, Andrew Grech, said: “The board and management teams are excited about now being in a position to complete this transformative transaction. We remain confident that the transaction will deliver significant value to all Slater & Gordon shareholders.”

As well as the upfront cash, S&G will pay an estimated £40m from a 50% earn-out from existing noise-induced hearing loss cases (NIHL).

The combination will give S&G an estimated 12% of the personal injury market in the UK, which it said was twice that of its nearest competitor, Irwin Mitchell, with Parabis and Minster Law following with 4% of the market each. All are alternative business structures.

The purchase is being funded 70:30 through institutional and retail share issues – which have been successfully completed – and bank debt.

By adding 2,400 staff, it virtually doubles the headcount across S&G. PSD has two strands: legal services, made up of law firms Silverbeck Rymer, Pinto Potts and The Compensation Lawyers, and costs firm Compass Law; and ‘complementary’ marketing, health and motor services, made up of eight brands including Accident Advice Helpline and Mobile Doctors.

PSD will be relaunched with a “reinvigorated brand” with the aim of moving away from NIHL claims to become the leading fast-track personal injury practice in the UK. The S&G brand will be focused on “more complex situations”, both in personal injury and other areas of consumer law.

Ken Fowlie, the current head of S&G’s Australian practice, will become managing director United Kingdom (UK) & Europe on completion. He has said previously that the deal diversifies S&G’s sources of legal work while also increasing its “touch points across the claims value chain”.

He has also sought to address concerns that S&G may not fully understand what it is buying, saying: “In reaching the decision to acquire PSD, we have undertaken a bottom-up, fundamental assessment of PSD’s historical performance and future potential, leveraging a large team of internal experts and external advisers. As part of this we restated PSD’s financials using Slater & Gordon’s own evidence-based accounting policies.

“This work, together with our firm’s deep UK market experience and track record of successful acquisitions and integrations, underpins our confidence in the opportunity.”

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