Dsw Capital Share News (DSW)

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42.50 0.60 (1.50%)

Bid:

40.00

Ask:

45.00

Spread: 5.00 (12.50%)

Market Cap: £10.20m

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DSW shares climb on the back of GBP6.1 million acquisition

Mon, 04th Nov 2024 14:25

(Alliance News) - DSW Capital PLC on Monday saw its shares climb as it revealed the completion of the "earnings-enhancing" acquisition of DR Solicitors Ltd.

Cheshire, England-based DSW revealed it has acquired Surrey, England-based DR Solicitors for a total consideration of GBP6.1 million, bringing in a "highly scalable, cash generative, and profitable" legal platform to the firm.

DSW emphasised the strength of the legal firm's financial position, noting that in the year ended March 31, it realised organic revenue growth of 11% to GBP3.1 million coupled with a profit before tax of GBP1.2 million.

Shares in DSW are up 18% at 65.00 pence on Monday afternoon in London.

Under the terms of the agreement, GBP4.3 million of the consideration is cash funded, with the remaining GBP1.8 million satisfied through the provision of 3.2 million new ordinary shares in DSW Capital, representing approximately 13% of the enlarged issued share capital of DSW.

The cash consideration is being funded through a new GBP3 million, three-year revolving credit facility with OakNorth Bank PLC, as well as with DSW's existing cash reserves.

The interest rate on the RCF is 4.5% above the Bank of England base rate, with DSW noting that it has drawn down the full amount in support of the acquisition.

According to DSW, the deal materially reduces its reliance on the cyclical SME M&A market from 68% of revenue to around 30%.

It stated that it intends to continue with its progressive dividend policy.

DSW Capital Chief Executive James Dow said: "This is a game changing acquisition, and we are delighted to announce it to our stakeholders. Not only is it immediately and significantly earnings-enhancing, but it also diversifies our revenues, building resilience, and provides an opportunity to expand into new professional markets.

"Working with DR's inspirational management team, we believe we can accelerate the growth of the business using the strength of the Dow Schofield Watts brand, and resources and, over time, build a substantial platform of diversified, niche legal services."

By Christopher Ward, Alliance News reporter

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