The firm reported a return to pre-pandemic activity and important structure changes
Following the release of its half-year financial results, Slater and Gordon has entered into a bid implementation agreement with Allegro Funds to allow Allegro to acquire the firm.
The off-market takeover agreement is subject to a superior takeover offer and the findings of the firm’s independent expert. It would allow Allegro to acquire all the issued and fully paid ordinary shares in Slater and Gordon at $0.55 cash per share, including those shares issued during the offer period to holders of performance rights who exercise their rights.
Slater and Gordon believed the takeover offer was reasonable and fair under the current market conditions and ensured the long-term sustainability of the firm and its balance sheet.
“Slater and Gordon shares are highly illiquid,” chair James MacKenzie said. “[Allegro’s takeover] offer is all cash and provides certainty of value for shareholders. Allegro’s investment also presents an opportunity for Slater and Gordon to simplify its capital structure, which is currently dominated by offshore hedge funds.”
Slater and Gordon’s board of directors unanimously supported Allegro’s takeover offer and recommended that the firm’s shareholders accept it, subject to a better offer and a favourable result from its independent expert, Kroll Australia.
“The board and key management personnel believe Allegro’s investment in Slater and Gordon will bring together a hands-on Australian investor focused on a growth-oriented partnership with one of Australia’s leading consumer law firms built on social justice values,” MacKenzie said.
Slater and Gordon predicted that Allegro would maintain the firm’s chief executive officer, John Somerville, and its three current independent directors in the board of directors, noting that Allegro “indicated the importance of governance and management security” in the transaction.
“Allegro is excited about the opportunity to partner with the Slater and Gordon team and assist in continuing to grow the firm which has a long and proud history in the Australian consumer law sector,” Allegro founding partner Adrian Loader said. “Allegro has significant experience investing in purpose-led professional services organisations such as Slater and Gordon and looks forward to working with its strong team of lawyers whom we are keen to retain, support, and incentivise.”
The announcement followed Slater and Gordon’s half-year results to 31 December 2022, which showed a $110m increase in net revenue resulting in $16.7m net profit, driven by higher personal injury law fees and strong growth in the firm’s works in progress. The firm also reported a gross operating cashflow of $5.5m compared to $1m in the previous half-year, which it attributed to stronger receipts in personal injury law.
Over the latest half-year period, Slater and Gordon settled five class actions, including three consumer credit insurance class actions on behalf of ANZ, CBA, and Westpac customers. It also reported a 14% increase in personal injury law enquiries, marking the return to pre-pandemic levels.
“These are a positive set of results today and they reflect the ongoing rebound from the impacts on our business from COVID, the hard work of our people on behalf of our clients, and the improvements that we are continuing to make to how we operate,” Somerville said. “Over the past five years, we have made good progress. However, we still have more work to do to continue to improve and deliver on our strategy.”
