I just thought I would clarify a few things on the Quindell takeover situation following last week's shenanigans on Betaville.
I have had a few readers raise questions about the £15 million that I previously reported Slater & Gordon paid to enter into "exclusivity" to buy Quindell's legal services division.
I don't think I explained the "exclusivity" payment particularly well in my previous article so I am going to try to here (below). In fact, the £15 million isn't for "exclusivity" but for a small percentage of Quindell's legal book, mostly focussed on motor insurance.
I understand Quindell allowed Slater & Gordon to do due diligence on 4pc of the AIM-listed business's legal book after the Australian company approached Quindell about buying its legal services unit late last year.
Quindell granted Slater & Gordon access to a small percentage of the book so that the Australian company could come up with a valuation of the sample and the whole legal services unit.
Slater & Gordon then said the small percentage of the book is worth around £12 million, according to my sources. In return for £12 million, Quindell gave Slater & Gordon a period of exclusivity to due diligence on the rest of its legal services unit.
My sources tell me that if Slater & Gordon don't proceed with an offer for the whole of the legal services unit, it has already agreed to purchase a small percentage of the book for £12 million not including VAT. If you include VAT, that gets you to about £15 million.
Moving on, I hear this situation is likely to get lively towards the end of the week, so keep an eye on Betaville.
Quindell and Slater & Gordon both declined to comment.
If 4% of the Motor book is worth 15 Million, then the whole Motor book is worth 375 Million. However, QLS has a large number of Industrial Deafness cases proceeding as well, each one worth up to 9,000 Pounds. Is S&G going to purchase these? It would be cheaper for S&G to raise funds and buy out QLS in it's entirety. I think 900-1000 Million is the price that Quindell would accept, but S&G may be looking to part pay with their shares.
ReplyDeleteThere has been a notable reduction of short interest in the last few days,and rumours are swirling regarding an important announcement to be made on Monday 2nd February.
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ReplyDeleteSlater and Gordons official response isn't positive at all
ReplyDeletehttp://www.asx.com.au/asxpdf/20150123/pdf/42w4d87sk12pfl.pdf