Law Debenture buying Konexo secretarial unit

(Sharecast News) - The Law Debenture Corporation announced on Tuesday that its wholly-owned subsidiary Law Debenture Corporate Services (LDCS) has entered into a binding agreement to acquire the company secretarial unit of Konexo UK, a division of Eversheds Sutherland International.
It said the acquisition would consist of the company secretarial business and assets, with total consideration coming in at £20m, payable in cash.

The FTSE 250 company said the acquisition had a "compelling" strategic rationale, in line with its stated strategy to grow the independent professional services business by way of "high-quality and selective external opportunities.

It said the acquisition, alongside a continued focus on organic growth, should positively support Law Debenture's long-term capital growth and steadily increasing income objectives.

For the financial year ended 30 April, the unit being acquired recorded revenues of £6.2m and estimated EBITDA of £2.2m.

The board said the acquisition would further strengthen Law Debenture's position as a professional services and governance firm, and enhance its customer proposition.

It added that it would complement its existing company secretarial offering, building on its existing sector knowledge and expertise.

Law Debenture said its accounting and company secretarial offering had shown "strong" organic growth both in 2019, and year-to-date in 2020.

Andy Casey, Head of the company secretarial unit, will transfer to Law Debenture, with the board confirming he is a Chartered Company Secretary with 14 years of industry experience, having joined Konexo in 2015 and promoted to head of the company secretarial unit in 2018.

Prior to joining Konexo, he spent nine years with PricewaterhouseCoopers.

The company secretarial sector offered long-term structural growth opportunities with favourable regulatory drivers, Law Debenture claimed, adding that demand for governance services was growing "strongly" for corporates as they faced ever-increasing compliance requirements and disclosure obligations.

It said the company secretarial unit offered "significant" longer-term revenue synergy opportunities with potential for cross-selling within accounting services.

The acquisition would help to strengthen Law Debenture's earnings outlook to facilitate dividend distributions, and support long-term capital growth and steadily increasing income objectives.

It was also expected to be EPS enhancing and accretive to the Group's long-term strategic vision and to value.

"The acquisition of CSS is an exciting and value-creating opportunity for Law Debenture and is consistent with our clearly stated strategy," said chief executive officer Denis Jackson.

"While IPS has a proven record of organic growth over recent years, we have remained alert to opportunities to accelerate our growth.

"It is encouraging to see such a long client tenure, often more than 10 years, and we look forward to working with the team at Eversheds Sutherland to ensure a smooth transition of the business."

Jackson said the combination would bring together "highly qualified and talented" colleagues, allowing the company to widen its existing expertise and capabilities to better service its clients.

"This is an important step in the continued execution of IPS' strategy that is both strategically and financially compelling with attractive longer-term revenue synergy opportunities."

At 0907 GMT, shares in Law Debenture Corporation were up 1.29% at 626p.