Slater & Gordon has confirmed to the Australian Securities Exchange (ASX) that a sale agreement for £33m has been made with Pannone.
The statement from the personal injury (PI) giant said due diligence on the merger was substantially completed. The transaction is expected to complete in late February 2014.
The acquisition is made up of a cash payment of £25.5m and the issue of £7.5m in Slater & Gordon shares. A proportion of the shareholding will be released subject to performance. The firm said it expected turnover to hit £34.5m by the end of 2013/14.
The transfer will consist of the consumer law side of Pannone, including: personal injury and serious injury; clinical negligence; court of protection; family; wills, trusts and probate; property; and some of the employment and dispute resolution practice areas.
Connect2Law chief executive David Jabbari is thought to have refused to join Slater & Gordon and resigned from the business last Thursday ahead of the final partner vote.
The head of Pannone’s white-label arm Affinity, Charles Layfield, also left the partnership last week, his departure is thought to have come as shock to his team.
Slater & Gordon has expressed an interest in acquiring Connect2Law and Affinity, but it is believed that talks are ongoing as to the future of the divisions.
Sources close to the firm have indicated that more departures are likely, particularly from practice areas unsuited to either Slater & Gordon’s core businesses or the spin-off, Pannone Corporate. The corporate arm is expected to be lead by dispute resolution and regulatory head Paul Jonson and senior partner Steven Grant.
It is understood that the M&A, banking and corporate recovery businesses will be disbanded, while sources suggest that those in more ambiguous roles will be moved to the PI practice.
Sources also suggested that the various Manchester-based Slater & Gordon acquisitions would be brought together in Pannone’s offices where there is excess space.
Slater & Gordon managing director Andrew Grech said: “Our focus in that UK for the next 12 months will be ongoing integration of the businesses acquired and delivering operational efficiencies – as we are now doing in the Australian businesses”.
Pannone managing partner Emma Holt said: “We look forward to working towards the completion of this deal with Slater & Gordon, the result of which will make us a stronger advocate for our clients as we continue to put them at the centre of everything we do.”
The Lawyer first revealed that the firms were in talks in September, bringing Slater & Gordon a step closer to its goal of being the lead consumer firm brand in the UK (20 September 2013). The talks have hit several delays.
Pannone partners initially showed their approval for the talks in September (26 September 2013), with Pannone managing partner Emma Holt aiming to complete the deal by 14 November. There were further delays and the vote finally went ahead earlier this week (11 November 2013).
In August, the firm announced a 10 per cent increase in UK turnover A$70.5m (£46.1m) for the 2012/13 financial year, just beating the target of A$70m set in 2012 annual report and representing a 10 per cent increase on the like-for-like revenues on the previous year.
Pannone saw turnover fall slightly at the 2012/13 year-end from £46.2m to £45.6m. Average profit per equity partner (PEP) stood at £239,000 from £224,000 (2 September 2013).
Slater & Gordon has steadily built up its UK arm since first entering the market through the acquisition of Russell Jones & Walker in January 2012 (30 January 2012). The firm’s latest acquisition, that of personal injury firm Fentons, was unveiled in August as the firm revealed turnover of £45.6m for the UK branch of the Australian firm (21 August 2013).
London and Manchester-based Fentons will add approximately 280 staff and annualised revenue of £27.7m to the UK business. Slater & Gordon’s report to the ASX said the two firms had executed a formal business sale agreement and due diligence had been substantially completed. It is expected to be complete in October 2013.
In May the firm revealed planned acquisitions of Simpson Millar, Goodmans Law and the personal injury practice of Taylor Vinters (7 May 2013). Deals with Taylor Vinters (19 August 2013) and Goodmans (30 August 2013) completed in August adding annualised revenues of £3.9m and £3.4m respectively.
Discussions with Simpson Millar have been deferred until early next year.