SYDNEY (Reuters) - Australian law firm Slater & Gordon Ltd SGH.AX said on Monday it agreed to buy a unit of British technology and outsourcing company Quindell Plc QPP.L for A$1.2 billion ($928.1 million), in a bid to penetrate the highly fragmented UK personal injury market.
Slater & Gordon said it was seeking to raise A$890 million in new equity to fund the acquisition of Quindell’s Professional Services Division (PSD).
Quindell’s shares rose as much as 30 percent to 180 pence per share on Monday morning on the London Stock Exchange.
“The combination of Slater & Gordon and PSD creates the number one personal injury law firm in the UK,” Slater & Gordon Managing Director Andrew Grech said. “It further diversifies our sources of legal work, broadening access to claims management companies, insurers and insurance brokers.”
Quindell’s chief executive, Robert Fielding, will join Slater & Gordon and Richard Rose will be named non-executive chairman if the deal goes through, the company said in a statement.
Shares in Quindell have slumped since short-seller Gotham City Research questioned the company’s revenue model and profit quality last April.
Before the Slater & Gordon deal was announced, Quindell said the division’s sale would improve its working capital profile.
Quindell said on Monday that it intends to use the proceeds from the sale to return cash to shareholders and repay debt. It expects to return about 500 million pounds ($741.80 million) initially.
The deal, expected to close in May, is conditional on a majority vote by Quindell shareholders, which is scheduled for April 17.
Slater & Gordon said Quindell’s board has unanimously recommended shareholders accept the offer and that it has already secured firm commitments representing more than 15 percent of Quindell’s issued share capital.
($1 = 1.2930 Australian dollars)
($1 = 0.6740 pounds)
Reporting by Jane Wardell in Sydney and Abhiram Nandakumar in Bangalore; Editing by Eric Walsh and Anupama Dwivedi
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