Australian stock exchange-listed Slater and Gordon has told investors that the acquisition of Quindell’s legal services arm will boost earnings per share (EPS) in the short term.
The £637m buyout of Quindell’s professional services division (PSD) was completed last week after the Financial Conduct Authority approved the deal.
The acquisition gives Slater and Gordon - which entered the UK in 2012 - a 12% share of this country’s personal injury market, and confirms Quindell’s effective departure from legal services provision after an eventful three years.
In a market update today, Slater and Gordon managing director Andrew Grech (pictured) said the company has completed ‘extensive’ due diligence work and is convinced of the merits of the deal.
‘We all recognise the challenges ahead but remain very confident that we can deliver the performance required to underpin the strategic rationale for the transaction,’ he said.
‘We continue to expect the PSD to be more than 30% EPS [earnings per share] accretive in our first full year of ownership.’
Following the acquisition, Slater and Gordon will employ 3,800 people across 27 locations in the UK. The company's UK operation now employs 2.5 times more people than the Australian one.
Confirmation of the acquisition prompted a rise in the value of Slater and Gordon shares, with the price rising almost 3% on the Australian stock exchange.
The Australian company has already confirmed that Quindell’s professional services division, which largely consists of personal injury and noise-induced hearing loss claims, will be a separate entity from its existing business. The disposal of the division reportedly involves around 53,000 hearing-loss claims which were being handled by Quindell.
Meanwhile, Quindell has stated it will adopt a more ‘conservative’ approach to accounting for revenue and profit after a review by accountancy firm PwC. The review found accounting policies of the company were ‘largely acceptable’ but at the ‘aggressive end of acceptable practice’.
The company said it is in discussions with its auditors as to the financial effect on its historical results, with the results expected to be published before the end of this month. The board has said it expects a reduction of capital and returns on capital to be made to shareholders.
The company has appointed a former leader of the Conservative party, Lord Howard of Lympne, as senior non-executive director.