Slater&Gordon builds empire with $35m Keddies purchase

LISTED law company Slater & Gordon announced plans to control half the personal injury lawsuit market after snapping up New South Wales firm Keddies Lawyers yesterday.

By InvestSMART · 27 Oct 2010

By InvestSMART ·
27 Oct 2010

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LISTED law company Slater & Gordon announced plans to control half the personal injury lawsuit market after snapping up New South Wales firm Keddies Lawyers yesterday.

The $35 million acquisition of Keddies follows the $57 million purchase of Queensland firm Trilby Misso in June, and the company is still looking for targets.

"There are still opportunities in South Australia, in Western Australia and in Victoria," chief executive Andrew Grech said.

Yesterday's acquisition will be funded from cash and debt, and the company has extended its loan facility with Westpac to $95 million.

The purchase will take Slater & Gordon's gearing to just over 30 per cent, which is at the low end of its target range, Mr Grech said.

"So we've still got headroom. We'll only spend if there is sufficient return on the capital."

With Keddies, Slater & Gordon controls more than 20 per cent of the personal injury market. "Other than the competition restrictions, I don't think there is any natural limit to the market up to about 40 or 50 per cent," Mr Grech said.

"In relation to most other listed companies, I think it's fair to say we are well in advance. We've still got an enormous growth trajectory," he told a shareholders' meeting.

He said potential growth areas for the firm were family law, conveyancing, wills and estate litigation, where the company controls less than 1 per cent of the market.

Slater & Gordon shares rose 5.5?, or 3.1 per cent, to close at $1.82.

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Frequently Asked Questions about this Article…

What did Slater & Gordon buy when it acquired Keddies Lawyers?

Slater & Gordon announced it purchased New South Wales firm Keddies Lawyers for $35 million, expanding its footprint in the personal injury legal market.

How does the Keddies purchase affect Slater & Gordon's personal injury market share?

With the Keddies acquisition, Slater & Gordon now controls more than 20% of the personal injury market. CEO Andrew Grech said the firm aims to grow further and believes the market could naturally allow around 40–50% share, subject to competition restrictions.

How was the $35 million acquisition funded and what happened to Slater & Gordon's loan facilities?

The acquisition was funded from a mix of cash and debt. Slater & Gordon extended its loan facility with Westpac to $95 million to support the deal and future activity.

What did the Keddies buy do to Slater & Gordon's gearing and financial headroom?

The purchase pushed the company's gearing to just over 30%, which the CEO said is at the low end of its target range. He noted the company still has headroom and will only pursue further spending if there is sufficient return on capital.

Is Slater & Gordon still pursuing more acquisitions and where are they looking?

Yes. The company has been actively buying firms (it paid $57 million for Queensland’s Trilby Misso in June) and is still looking for targets, naming opportunities in South Australia, Western Australia and Victoria.

What other legal markets does Slater & Gordon see as growth opportunities?

Beyond personal injury, Slater & Gordon identified family law, conveyancing, and wills and estate litigation as potential growth areas—markets where it currently controls less than 1%.

How did the market react to the Keddies acquisition in terms of Slater & Gordon's share price?

The article reports Slater & Gordon shares rose to close at $1.82 following the announcement (the reported rise is around 3.1–5.5%).

What did Slater & Gordon's CEO say about the company's growth outlook compared to other listed companies?

CEO Andrew Grech told shareholders the firm is well in advance of most other listed companies and that Slater & Gordon still has an enormous growth trajectory ahead.