Quindell, the insurance claims processor, has sought to quell concerns that negotiations with Australian law firm Slater & Gordon regarding the sale of its professional services division are unravelling, stating that the exclusive talks have been extended to the end of March.
The Aim-traded company said on Monday the price being discussed implied a “significant premium” to the market capitalisation of the whole company.
Slater & Gordon disclosed that it was talking to the group in January, and this month Quindell said the negotiations were continuing. Quindell’s shares rose 25 per cent on Monday to 94.75p.
Quindell was a stock market darling until it was targeted by short sellers last April. Since then it has been trying to restore stability after its joint broker resigned and its chairman was forced out. Monday’s announcement was the fourth time this year the company had issued a statement in relation to “press speculation”.
The professional services division — which includes the processing of insurance claims and provision of related medical and repair services — had revenues of £177m in the three months to September 2014. It accounted for 88.5 per cent of sales and 80 per cent of its earnings before interest, taxation, depreciation and amortisation during that period.
Quindell’s other division, “digital solutions”, provides black boxes for use by motor insurers.
However, the value of the division is unclear. The Daily Mail has reported that the Australian firm reduced the price it initially offered by a third, to about £700m, but even this price is significantly above Quindell’s market valuation, which on Monday jumped to £412m.
“Discussions are progressing with SGH and the indicative terms being discussed would imply a significant premium to the company’s market capitalisation at the close of trading on 20 February 2015,” it said.
Quindell said there could be “no certainty that these discussions will lead to an offer for, or the disposal of, the [professional services division]”. Its shares have risen nearly 90 per cent this year on speculation of a deal, although they have fallen a similar amount over the past 12 months.
Slater & Gordon, one of the world’s first publicly traded law firms, has been expanding aggressively in the UK — mostly handling “no win, no fee” personal injury claims.
The UK accounted for nearly half its A$418.5m (US$326.6) in revenues last year and its current market capitalisation is about £795m.
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