Slater & Gordon poised to fall into private equity hands
Law firm Slater & Gordon is poised to fall into the hands of a private equity owner in a deal that values the once multi-billion-dollar company at just $150 million.
The ASX-listed law firm on Wednesday requested its shares be halted from trading ahead of the announcement of a major transaction and its half-year results.
The company requested the trading halt following a report in the Australian Financial Review on Tuesday, which said a private equity firm was working on a deal to buy the law firm for about $150 million.
Best known for its class action, industrial relations and personal injury practices, Slater & Gordon was one of the first law firms in the world to list on a stock exchange when it debuted on the ASX in 2007. The firm went on to acquire several smaller firms both in Australia and the UK, where it created a significant business, employing thousands of staff.
However, the group has been under financial pressure since its ill-fated $1 billion acquisition of the professional services business of UK group Quindell in 2015.
Within months of the transaction, short sellers alleged that Quindell’s business was not as sound as previously thought, and that it had been overstating its revenues. Those issues were soon largely confirmed by Slater & Gordon.
Confirmation of Quindell’s problems and questions about Slater & Gordon’s own accounting practices led to a crash in Slater & Gordon’s share price, with billions of dollars of shareholder wealth, including that of staff shareholders, lost.
Investors took another hit in 2017 when the group underwent a painful recapitalisation that nearly wiped out all remaining value for existing shareholders and led to hedge funds owning a large portion of the group’s shares.
A spokeswoman for Slater & Gordon declined to comment.
More to come…
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Source: Thanks smh.com