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Slater & Gordon directors ‘unanimously support’ takeover offer by Allegro Funds
One of Australia’s biggest law firms — and the first to ever list on the ASX — is set to agree to be acquired by private equity firm Allegro Funds, in a move that could shake up the nation’s legal services marketplace.
Jerome Doraisamy
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On the night of Tuesday, 21 February, the Australian Financial Review reported that national listed plaintiff firm Slater & Gordon (ASX: SGH) was closing in on a deal to be acquired by Australian PE firm Allegro Funds, with the transaction to be approved by the firm’s board and big-name shareholders.
Slater & Gordon — which featured in the Top 25 Attraction Firms ranking, recently unveiled by Lawyers Weekly — was the first law firm to debut on the ASX, back in May 2007.
Allegro Funds, which has more than $4.1 billion in funds under management, says that it specialises in the turnaround, special situations and transformation investing space.
On Wednesday morning (22 February), trading was halted for the securities of Slater & Gordon Limited earlier this morning, pending an announcement.
As of the time of that trading halt, the firm’s share price was $0.56, with market capitalisation at $79.7 million.
On Friday morning (24 February) — exactly 48 hours after the trading halt — the firm confirmed that, after the closing of the market on Thursday, the company signed a bid implementation agreement (BIA) with a subsidiary of Allegro Funds, providing for a recommended off-market takeover for 100 per cent of the listed company shares at $0.55 per share.
A takeover at that price would see the company valued at approximately $78 million, contrary to earlier media speculation of a $150 million price tag.
The directors of Slater & Gordon “unanimously support” the offer made by Allegro, the firm said, and recommend that its shareholders accept the offer, in the absence of a superior proposal and subject to independent expert guidance.
“The board has carefully considered the offer and concluded the value and certainty provided provides greater benefit to shareholders than retaining their shares,” the firm submitted.
In a statement, Slater & Gordon chair James MacKenzie said that the board and key management personnel believe that Allegro’s investment in the national plaintiff firm “will bring together a hands-on Australian investor focused on a growth-oriented partnership”.
“Slater & Gordon shares are highly illiquid,” he continued.
“The offer is all cash and provides certainty of value for shareholders. Allegro’s investment also presents an opportunity for Slater & Gordon to simplify its capital structure, which is currently dominated by offshore hedge funds.
“In this context, the board and executive leadership are excited for shareholders, the Slater & Gordon team, and current and future clients.”
Allegro founding partner Adrian Loader added that the PE firm is excited to partner with the national plaintiff practice “and assist in continuing to grow the firm which has a long and proud history in the Australian consumer law sector”.
“Allegro has significant experience investing in purpose-led professional services organisations such as Slater & Gordon and looks forward to working with its strong team of lawyers whom we are keen to retain, support and incentivise,” he noted.
Kroll Australia has been appointed as an independent expert to evaluate the fairness and reasonableness of the offer.
The news comes as fellow listed national plaintiff firm Shine Lawyers (ASX: SHJ), posted its half-year results, showing a drop in net profit of 18 per cent.
Last financial year, Slater & Gordon’s net profit after tax dropped from $14.5 million to $2.2 million, on the back of COVID-19 lockdowns in the big cities and corresponding fewer road and workplace accidents. At the time, however, the firm said that it is “now back on its trajectory of improvement”.
News of the acquisition follows the near-$30 million settlement that Slater & Gordon reached with Westpac in the BT class action late last year, as well as the $126 million settlements secured in class actions against CBA, Westpac and ANZ.
In September of last year, Slater & Gordon commenced investigations into Optus following what the firm labelled, at the time, “potentially the most serious privacy breach in Australian history”.
Lawyers Weekly has reached out to both Slater & Gordon and Allegro Funds for comment.
MORE TO COME.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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