Shares in Slater & Gordon’s target, Quindell, surge 25pc in London
|21/03/2019||Posted by admin under 南京夜网||
Slater & Gordon is seeking $890 million from shareholders to fund its proposed acquisition of troubled UK professional services firm Quindell. Photo: Jessica ShapiroSlater & Gordon’s $1.2 billion deal to buy the troubled UK professional services firm Quindell prompted a 25 per cent jump in its share price in London overnight, a “remarkable recovery” in some sceptics’ eyes.
Dubbed a “deluxe ambulance-chaser” in Britain, Quindell’s prices soared 30 per cent in early London trading rising to 180p before falling back to 148p. At the beginning of the month it traded at 90p.
The deal, greeted with widespread interest and a few raised eyebrows by the financial press, forms a major plank of Slater & Gordon’s aggressive expansion into the UK with much of its work in the lucrative ‘no-win, no-fee’ personal injury claims.
Already, the UK accounted for close to half of its $418 million revenue last year, with both companies signalling the deal will create the UK’s largest personal injury firm.
Under the Slater & Gordon deal, Quindell plans to return as much as £500 million of proceeds to shareholders later this year, fuelling the share rise on AIM, London’s junior stockmarket.
Quindell’s interim chairman, David Currie, installed after its founder, Rob Terry, was unceremoniously removed late last year in a bid to restore investor confidence, described the move as a “landmark”, one which would allow it to “move forward with renewed purpose”.
The company, described by the Financial Times recently as an “unusual collection of loosely related insurance, technological and legal businesses piled on top of a golf club” has struggled with a share price tumble, losing over £2 billion in market value last year prompting industrywide speculation it was running out of cash.
A Price WaterhouseCoopers report was commissioned last year to investigate the company’s much-weaker-than-expected financial results and while this report has yet to be made public, a preliminary statement on the review provided by Quindell on Monday found that “accounting practices in some parts of the group were described as “largely acceptable but are at the aggressive end of acceptable practice”.
The company was listed on AIM in May 2011 via a reverse merger as a small technology company, and moved quickly to buy up a series of companies servicing the motor industry insurance industry.
The company’s pledge was to build a multiplatform, one-stop shop provider of services, from car hire, legal advice and medical assessments, aimed at “revolutionising” and slashing costs to the car insurance industry. Companies swallowed up by Quindell included a Mobile Doctors business to offer nursing, occupational therapy and psychological assessments for drivers and passengers as well as the acquisition of two legal firms and a car repair business.
The company grew rapidly in its first year but was enveloped in turmoil in 2014 after a New York-based research company launched a scathing, short-selling attack and a series of controversial share sales and resulted in the board’s decision to shake up management from the top down.
While some observers have hailed the company’s model as a compelling investment story, other commentators are unconvinced by both the business model and the company’s rapid growth.
They argue that while Quindell provides the full gamut of services to the insurance industry when a claim is made, it still has to pay the insurer upfront for car crash cases and then it takes aslong as six months to receive payment once the claim is resolved.
“This means that though the outsourcing group reported revenue of £380 million in 2013, it generated operating cash of just £10 million” the Daily Telegraph in London reported.
Concern has also been raised over a previous venture founded by Rob Terry in 2000. As chief executive of the newly created insurance software firm The Innovation Group, he led the company in a similarly rapid expansion campaign just before the dotcom bubble burst. Similarly to Quindell, this company too became involved in a complex reverse takeover.
However valuations, despite its well-received technology, were affected and Terry left the company three years after in the wake of a share price collapse.
This story Administrator ready to work first appeared on Nanjing Night Net.