TIDMDWF
RNS Number : 4813W
DWF Group PLC
11 December 2019
DWF Group plc
("DWF", the "Group" or the "Company")
Delivering on our strategy: significant acquisition establishes
a major presence in Spain
11 December 2019
This announcement contains inside information.
Highlights
-- DWF to acquire a leading independent Spanish law firm Rousaud
Costas Duran ("RCD") for up to EUR50.5m (GBP42.5m) in shares and
cash, of which EUR7.4m (GBP6.2m) is payable in cash at completion
with up to EUR15.5m (GBP13.1m) in deferred or contingent cash
consideration
-- The strategic acquisition will significantly expand DWF's
international capabilities via offices in Madrid, Barcelona and
Valencia and provide access to an extensive network of connections
in the Iberian Peninsula and Latin America
-- RCD, which will bring 40 new partners and c. 400 people in
total, is one of the fastest growing firms in Spain and operates in
the same sectors as DWF with a focus on similar capabilities
-- Significant capabilities and sector alignment and a shared
focus on innovation will support the potential for future natural
synergies
-- Acquisition expected to be accretive to adjusted earnings per
share in the first full financial year post completion
DWF, the global legal business providing Complex, Managed and
Connected Services, announces that it has reached a definitive
agreement to acquire RCD, a leading independent Spanish law firm,
for up to EUR50.5m (GBP42.5m) in shares and cash with the
transaction expected to complete prior to 31 December 2019 (the
"Acquisition"). Initial consideration consisting of EUR7.4m
(GBP6.2m) in cash and EUR27.6m (GBP23.2m) in newly issued DWF
shares will be paid at completion (the "Initial Consideration"). An
additional cash consideration of up to EUR15.5m (GBP13.1m) will be
partly deferred and partly contingent on performance.
Acquisition rationale and background
RCD is a full-service law firm with strengths in corporate law,
tax, insurance, financial services, real estate and energy. It is
also a leading firm in Spain for innovation and entrepreneurship
and has been consistently ranked by The Financial Times among
Europe's most innovative law firms.
RCD's experienced leadership team includes founders and
Co-Managing Partners Adolf Rousaud and Ignasi Costas.
The Acquisition cements DWF's presence in Spain by establishing
offices in Madrid, Barcelona and Valencia, with all 40 of RCD's
partners and more than 400 people joining the Company. DWF has been
working with RCD for more than a year and formalised this as an
exclusive association in June 2019.
The transaction will be DWF's largest acquisition to date and is
expected to be accretive to adjusted earnings per share in the
first full financial year post completion. With significant
capabilities and sector alignment and a shared focus on innovation,
the transaction brings opportunities for potential natural
synergies.
The Acquisition will play another important part in expanding
the Group's global network and will significantly enhance its
international division. The deal adds a leading independent law
firm and a Connected Services business in Spain to the Company's
international footprint as well as a strong network of connections
in the Iberian Peninsula and Latin America. Following the
acquisition, DWF will have offices in 12 European cities including
Warsaw, Brussels, Dublin, Paris, Milan and four in Germany.
Transaction details
RCD's reported revenue for the 12 months ended 31 December 2018
was EUR35.7m (GBP31.6m), with pro forma EBITDA of EUR8.1m (GBP6.8m)
(adjusted to DWF's partner compensation policy). RCD's gross assets
at 31 December 2018 were EUR15.9m (GBP14.3m). As part of the
transaction, the Group will be assuming EUR5.6m (GBP4.7m) of net
debt (including amounts payable to RCD shareholders of EUR2.5m
(GBP2.1m)).
DWF has reached an agreement to acquire full ownership of RCD
from its equity partners for an Initial Consideration of EUR35.0m
(GBP29.4m), of which EUR7.4m (GBP6.2m) is payable in cash and
EUR27.6m (GBP23.2m) is payable in new shares issued by DWF at
completion. Contingent consideration of EUR2.3m (GBP1.9m) is
payable in cash one year post transaction provided RCD meets agreed
performance targets. Additionally, deferred cash consideration,
subject to continuing employment, of EUR13.2m (GBP11.1m) will
potentially be payable over a two-year period following completion
(the "Deferred Consideration"). The maximum potentially payable to
the RCD sellers is EUR50.5m (GBP42.5m), if all conditions for the
Contingent Consideration and Deferred Consideration are met.
Due to the share consideration element of the Initial
Consideration, DWF will issue 19,525,927 new ordinary shares in the
Company (the "Consideration Shares"), based on the share price
average over the last five working days. It has been agreed that
1,966,172 of the Consideration Shares will be issued to DWF's
Employee Benefit Trust for the purpose of remunerating and
incentivising employees of RCD.
The Consideration Shares are subject to a lock-in period of five
years, with shares released in tranches during the lock-in period
dependent upon individual sellers remaining with the Group ("time
tranches") and meeting performance targets ("performance
tranches"). Both time and performance tranches are due to be
released upon announcement of the Group's preliminary annual
financial results for the periods ending 30 April 2020 to 30 April
2024 and a final time and performance tranche is due to be released
following determination of performance for an eight month
non-statutory financial period ending 31 December 2024. The lock-in
includes leaver and claw back provisions which are similar to those
entered into by other partners of the Group.
The completion of the acquisition is subject to the satisfaction
of certain pre-conditions which are expected to be met before the
calendar year end. Application will be made for the Consideration
Shares to be admitted to the Official List of the Financial Conduct
Authority and to trading on the London Stock Exchange's main market
for listed securities, following completion. A further announcement
will be made in due course.
IPO Lock-Up Restrictions
In accordance with LR9.6.17, DWF announces that the lock-up
restrictions will be lifted from one DWF partner's 5,365,200 shares
in the Company due to personal circumstances and the partner will
enter into an Orderly Market agreement with the Company.
Andrew Leaitherland, Group CEO at DWF, said:
"I am delighted to welcome our RCD colleagues to DWF in another
important step for the business. The transaction complements the
Group's existing international offering and boosts our expertise
and ability to support clients in Spain, and provide access to an
extensive network of connections across the Iberian Peninsula as
well as Latin America.
"The Acquisition is consistent with DWF's strategy of acquiring
complementary businesses with high levels of recurring revenue and
strong cash generation. RCD will sit within the International
division which remains one of the priority growth opportunities and
therefore priority areas for the Group's capital allocation.
"RCD has a range of potential synergies with DWF, with
significant capabilities and sector overlap in our three global
areas of insurance, financial services and real estate. As leading
legal innovators, our businesses have a strong focus on doing
things differently, and this is the next logical step towards
providing Complex, Managed and Connected Services globally. The
transaction also builds on our recent acquisition in Poland,
displaying our international expansion ambitions and continued
delivery on our IPO priorities."
Adolf Rousaud, Co-Managing Partner at RCD, said:
"Joining DWF provides an excellent opportunity to continue our
growth and development, and we are very excited to be part of the
Group's extensive international network which will give us a far
broader geographic reach to support our clients. DWF is one of the
most innovative legal businesses in the world, and what really
attracted us was the cutting-edge approach to providing legal
services, supported by leading people and technology. Our values
and culture, as well as our strongly aligned sector focus, provide
the ideal platform for our future success with DWF."
Ignasi Costas, Co-Managing Partner at RCD, said:
"We are thrilled to be joining DWF. This represents another step
in our development, which we started only 16 years ago with a
commitment to innovation and entrepreneurship. Since then, and
thanks to the trust placed in us by clients and our people alike,
we have grown to become one of the main law firms in the Spanish
market with a transformative approach to law."
The person responsible for arranging for the release of this
announcement on behalf of the Company is Andrew Leaitherland, Group
Chief Executive Officer
For further information:
DWF Group plc
Andrew Leaitherland
Chris Stefani
James Igoe +44(0)20 7280 8929
Finsbury
Ed Simpkins
Charles O'Brien +44(0)20 7251 3801
Stifel
Stewart Wallace
Tom Marsh +44 (0)20 7710 7612
Jefferies
Max Jones
William Brown +44 (0)20 7548 4576
Zeus
Dominic King
Dan Bate +44 (0) 20 3829 5607
Notes to Editors
About DWF
DWF is a global legal business providing complex, managed and
connected services, operating from 28 key locations with
approximately 3,200 people. The Company became the first Main
Market Premium Listed legal business on the London Stock Exchange
in March 2019. DWF recorded revenue of GBP272.4 million in the year
ended 30 April 2019. For more information visit: www.dwf.law
About RCD
Founded in 2003, RCD is a leading provider of comprehensive
legal advice and has over 20 legal and sectoral areas of expertise.
With a team of over 400 professionals led by 40 partners, it ranks
among the top Spanish law firms. RCD has been recognized for the
past four years for its innovative capacity in the European ranking
Financial Times FT - Innovative Lawyers. The firm has offices in
Madrid, Barcelona and Valencia. For more information visit:
www.rcd.legal
Forward-looking statements
This announcement contains certain forward-looking statements
with respect to RCD's and the Group's current targets, expectations
and projections about future performance, anticipated events or
trends and other matters that are not historical facts. These
forward-looking statements, which sometimes use words such as
"aim", "anticipate", "believe", "intend", "plan" "estimate",
"expect" and words of similar meaning, include all matters that are
not historical facts and reflect the directors' beliefs and
expectations and involve a number of risks, uncertainties and
assumptions that could cause actual results and performance to
differ materially from any expected future results or performance
expressed or implied by the forward-looking statement. The Company
does not assume any obligation to update or correct information
contained in this announcement (whether as a result of new
information, future events or otherwise), except as required by
applicable law.
Rounding
Certain figures included in this announcement, including
financial information, have been subjected to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this announcement may not conform exactly
with the total figure given.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQUAVNRKBAUARA
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December 11, 2019 02:01 ET (07:01 GMT)
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