DWF.L Regulatory News (DWF)

DWF Group plc

("DWF", the "Group" or the "Company")

7 November 2022

DWF to enter Canadian legal market with acquisition of Whitelaw Twining

DWF, the global provider of integrated legal and business services, is pleased to announce that it has reached an agreement to acquire Whitelaw Twining Law Corporation, a leading independent law firm headquartered in Vancouver, Canada, and TWK Management Limited, an intra-group services company (collectively, "Whitelaw Twining").

Highlights

· Whitelaw Twining is a Canadian law firm specialising in insurance, commercial litigation, personal injury and dispute resolution

· Acquisition brings a strong strategic fit, greater scale and an enhanced platform in North America

· Clear synergy opportunity with DWF's existing Canadian claims and adjusting businesses and global insurance sector focus

· Acquisition is valued at up to CA$42.6m (£27.7m)[1] with total consideration of up to CA$26.0m (£16.9m), payable in shares and cash, and debt of CA$16.6m (£10.8m) to be repaid or assumed

· Whitelaw Twining revenue was CA$34.5m (£20.0m) and pro forma EBITDA (adjusted to DWF reporting) was CA$5.3m (£3.0m), in 2021

· The Whitelaw Twining acquisition is expected to be earnings enhancing in the first full year of ownership 

Whitelaw Twining overview and strategic rationale

Whitelaw Twining is a full-service litigation law firm specialising in insurance, commercial litigation, personal injury and dispute resolution offering a strong strategic fit and clear business overlap with DWF, especially its focus on the London insurance market.

Founded in Vancouver in 1979 as a boutique three-partner law firm, Whitelaw Twining now has 16 partners and more than 200 people in total, with offices in Vancouver and Calgary. Its management team consists of Daniel Shugarman (Country Managing Partner), Kim Wigmore (Head of Business Development) and Michael Silva (Head of Operations).

The transaction marks the next step in DWF's North American strategy and will result in an integrated legal and business services offering in Canada which will also align to the Group's existing Mindcrest and claims operations in Chicago.

Whitelaw Twining financial performance

Whitelaw Twining's reported revenue for the 12 months ended 31 December 2021 was CA$34.5m (£20.0m), with pro forma EBITDA of CA$5.3m (£3.0m) (adjusted to reflect DWF's partner compensation and reporting policy). Whitelaw Twining's gross assets at 31 December 2021 were CA$21.6m (£12.6m).

Financial benefits of the transaction

Based on the existing working relationship between the two firms, DWF identified a strong strategic and cultural fit with Whitelaw Twining, providing DWF with the ideal platform to strengthen its market position in Canada with legal services that complement existing claims and adjusting businesses. The two firms have global insurer clients which consistently feature among the top 10 clients of each business, with the potential to develop new client opportunities in the Canadian market and elsewhere. This also creates a tangible opportunity to capture referral work through DWF's existing claims management and adjusting practice in Vancouver and Toronto. DWF prudently estimates that the transaction will therefore allow it to deliver around $0.9m (£0.6m) of synergy-led EBITDA enhancement to Whitelaw Twining on an annual run-rate basis by FY24.

The Whitelaw Twining acquisition is expected to be earnings enhancing in the first full year of ownership, and the cash payments will be funded from the Group's debt facilities and existing cash resources. More detail of the cash and share payments is set out below. If the transaction had been completed on 30 April 2022, it would have added 0.11x to the leverage (net debt / EBITDA on an IFRS basis) of the Group. We expect deleveraging beyond the current financial year to be driven by profitable growth and strong cash generation, providing ongoing flexibility for continued growth in the business and the delivery of shareholder returns.

Sir Nigel Knowles, Group CEO at DWF, said: "We are delighted to be enhancing our offering in the Canadian legal market. Whitelaw Twining is one of the country's top legal businesses and represents a high quality opportunity for our clients. It also allows us to expand our claims and adjusting presence in Canada and wider Connected Services and Mindcrest capabilities in North America.

"We have worked hard to ensure DWF is in a strong position so we can confidently make these key international acquisitions, enabling us to make further progress against our strategy to be the preeminent global provider of integrated legal and business services.

"I look forward to working with our new colleagues. We identified a strong cultural fit with the Whitelaw Twining management team and the values and ways of working within their business. Their emphasis on internal collaboration over competition and on creating a progressive, innovative, and supportive working environment reflect our own 'one team' culture."

Daniel Shugarman, Country Managing Partner of Whitelaw Twining, said:

"We are excited to be forming a partnership with the DWF Group, combining our respective Legal Advisory and Connected Services capabilities for the benefit of our clients. Over 40 years, Whitelaw Twining has gone from a three-person practice in Vancouver to a diverse, full-service litigation law firm serving clients in 17 languages. This is the next step forward for our business, further strengthening our position in Canada and creating opportunities for our colleagues to support clients globally.

"We already know DWF well, in particular, its Canadian claims and adjusting practice. We recognise the shared values and 'one team' approach of our two businesses and we are delighted that through DWF Group's listed company status we are able to make our Whitelaw Twining colleagues shareholders with an opportunity to benefit from our future success."

Acquisition terms

The acquisition is valued at up to CA$42.6m (£27.7m) with a maximum consideration of up to CA$26.0m (£16.9m) payable in shares and cash, and the assumption or repayment of debt of CA$16.6m (£10.8m), with completion anticipated by the end of 2022.

Initial consideration consisting of an estimated CA$17.8m (£11.5m) in newly issued DWF shares will be paid on 3 January 2023 (the "Initial Consideration"). Cash consideration of CA$4.4m (£2.9m) will be paid in February 2023. Contingent share consideration with a value of up to $3.0m (£2.0m) may be paid provided certain 2022 calendar year financial targets and criteria are met.

As part of the transaction, the Group will assume estimated external net debt of CA$5.9m (£3.8m) and repay shareholder debt of CA$10.7m (£7.0m). Of this shareholder debt, CA$9.2m (£6.0m) will be repaid on completion with the remaining balance of CA$1.5m (£1.0m) payable in February 2023. This will be offset by partner capital contributions from the Whitelaw Twining shareholders of $2.0m (£1.3m), due by February 2023.

For the share element of the consideration, DWF will issue 16,504,757 new ordinary shares in the Company (the "Consideration Shares") on 3 January 2023. These will be subject to the customary lock-up period of approximately five years, in line with the Group's existing agreements.

In addition, an Employee Share Program will be created with a value of $0.8m (£0.5m) for the purpose of remunerating and incentivising employees of Whitelaw Twining by 31 December 2022. The Employee Share Program may be provided on an equity-settled or cash-settled basis.

A partnership will also be established in British Columbia to provide Legal Advisory and Connected Services through the operations of Whitelaw Twining and DWF's existing loss adjusting practice in Ontario, whilst a relationship agreement will be entered into between DWF and Whitelaw Twining's Alberta practice.

The completion of the acquisition is subject to the satisfaction of certain pre-conditions, which are expected to be met by the end of 2022. Following issue, application will be made for the Consideration Shares to be admitted to the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's main market for listed securities and a further announcement will be made in due course.

For further information:

DWF Group plc

James Igoe

+44(0)7971 783533

Head of Communications & IR

H/Advisors Maitland

Sam Turvey or Sam Cartwright

+44(0)20 7379 5151

About DWF Group

DWF is a global provider of integrated legal and business services provided through its three offerings of Legal Advisory, Mindcrest and Connected Services. It has approximately 4,000 people and offices and associations located across the globe. The Company became the first Main Market Premium Listed legal business on the London Stock Exchange in March 2019. DWF recorded revenue of £350.2 million in the year ended 30 April 2022. For more information visit: dwfgroup.com

DWF's three divisions represent its single Integrated Legal Management approach through which the Group can seamlessly combine any number of these services to deliver bespoke solutions to its clients with greater efficiency, price certainty and transparency. This approach enables DWF to offer clients solutions that combine traditional law firm services with new, modern legal and business services relevant to today's companies and the challenges and opportunities they face.

About Whitelaw Twining

Whitelaw Twining is a full-service litigation law firm, founded in Vancouver with over 150 fee earners in its Vancouver and Calgary offices. It is an industry leader in the fields of insurance, commercial litigation, construction, plaintiff's personal injury and alternative dispute resolution services. Whitelaw Twining is an innovative, passionate team, building long-term relationships with local, national and international clients for more than 40 years.

Forward looking statements

This announcement contains certain forward‐looking statements with respect to the Company's current targets, expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts. These forward‐looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan" "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward‐looking statement.