LAWFUEL – Law Firm Newswire – Recently-floated Australian law firm Slater & Gordon will use its booming share price and $2.3 million in debt to buy a small Queensland law firm that specialises in military compensation claims.
The deal was unveiled yesterday, one week after Slaters became the first law firm to list its shares on the Australian Securities Exchange.
Slaters sold shares worth $35 million last week, and yesterday’s deal will leave Slaters with short-term borrowings of $9.4 million.
Slaters will buy Brisbane firm D’Arcys for $2.8 million, made up of $2.3 million in cash and shares in the listed firm worth $475,000.
The cash component will be financed by drawing down the firm’s short-term debt, which already stood at $7.1 million after $15.4 million raised in the float was used to reduce borrowings.
If Slaters sticks to the business plan outlined in the company’s prospectus, all of that $15.4 million will be drawn down to pay for acquisitions.
This would leave the newly floated company with debt of $22.5 million.
The share component in the D’Arcys transaction will be priced at last week’s volume-weighted average price.
The company’s $1 shares, which listed on May 20, closed at a 40 per cent premium on their first day, and have touched $1.79 before closing at $1.70 yesterday.
Slaters chief operating officer Mike Feehan said yesterday that none of the firm’s lawyers were paying any attention to the booming share price.
Slaters said the D’Arcys acquisition was expected to be earnings-accretive in the first year.
D’Arcys principal Vince Green said the three lawyers in his practice would become part of Slaters’ Brisbane practice from July 1.