TIDMRBGP
RNS Number : 9664V
RBG Holdings PLC
20 April 2021
20 April 2021
RBG Holdings plc
("RBG" or the "Group")
Acquisition of Memery Crystal
RBG Holdings plc (AIM: RBGP), the professional services group,
is pleased to announce the acquisition of the business of Memery
Crystal LLP ("Memery Crystal"), a leading legal services provider,
for a total consideration of GBP30.0 million (the
"Acquisition").
The Acquisition is in line with the Group's M&A strategy set
out in its Admission Document. This strategy aims to focus on
high-margin professional services companies, like Memery Crystal,
which also create opportunities for the cross-referral of
business.
Highlights:
-- Based in London, Memery Crystal is a specialist international
law firm with 146 employees, including 29 partners, and an
additional 66 fee earners
-- Strong focus on transactions which makes it a complementary
fit with the Group's law firm Rosenblatt Limited ("RBL"), which has
a majority of its revenue derived from contentious law
-- The Acquisition is in line with RBG's strategy to diversify
the Group's revenue streams to create opportunities for business
expansion and integration
-- The total consideration for the Acquisition is GBP30.0
million comprising (upon completion) GBP12 million in cash, GBP11.2
million in RBG shares and a further GBP6.8 million in cash deferred
across 12 months
-- The Board expects the transaction to be immediately, and
materially, earnings and value-enhancing to the Group
-- Key management and employees of Memery Crystal have agreed to
a long-term lock-in for shares and lengthy non-compete clauses
within the sale and purchase agreement
-- Both businesses will retain their own management, brand
identities and separate offices, and together will form the Group's
Legal Services Division
-- The Group has extended its revolving credit facility ("RCF")
to GBP15 million and taken out acquisition finance totalling GBP10
million
Nicola Foulston, CEO of RBG Holdings, commented: "Today's
acquisition of Memery Crystal is another significant step in the
Group's development. Memery Crystal is a complementary fit with our
existing law firm, RBL. We believe the acquisition will be
transformative in terms of the scale of our business. Memery
Crystal is a very successful firm, which combined with our
commercial focus on margin and cash, can be even more
profitable."
Nick Davis, CEO, Memery Crystal, added: "As a firm, we are
excited to be joining RBG. For Memery Crystal, it is very much
business as usual. We will be retaining our own management and
brand identity along with our distinctive partner-led culture.
Memery Crystal and RBL will naturally complement each other as part
of the Group's Legal Services Division. The strength of the
combined Group will mean we can offer enhanced services to clients
and provide a stronger entity for staff to develop their
careers."
Acquisition Rationale
RBG aims to grow its service offering to clients and diversify
its revenue through the acquisition of complementary businesses in
the professional services space. Its ambition is to create a broad,
high-quality, high margin professional services group with a focus
on specialist companies which can also create opportunities for
cross-referrals. The Board will only consider acquisitions which it
feels represent an appropriate price and deal structure. Memery
Crystal is a very exciting acquisition which will be immediately
earnings enhancing, which RBG believes has the potential to
generate significant value for shareholders over the long term.
The Group will remain disciplined in its approach to M&A and
continue to review potential opportunities according to its
selective criteria.
About Memery Crystal
Memery Crystal was founded in 1978 by John Memery and Peter
Crystal. At the date of exchange, the Firm has 146 employees,
including 29 partners, and an additional 66 fee earners.
Based in London, Memery Crystal offers legal services in a range
of areas such as Corporate (including a market-leading corporate
finance offering), Real Estate, Commercial, IP & Technology
(CIPT), Banking & Finance, Tax & Wealth Structuring,
Employment and Dispute Resolution. Memery Crystal is one of the
leading firms in the UK to advise the emerging cannabis sector on a
wide range of business issues.
The Firm offers a partner-led service to a broad range of
clients, from multinational companies, financial institutions,
owner-managed businesses to individual entrepreneurs. The Firm has
transacted in over 100 jurisdictions and has been recognised in
numerous categories in the latest Chambers UK and Legal 500 UK
rankings.
In the year ended 30 April 2020, Memery Crystal had unaudited
revenue of GBP23.2 million and profit for the year (before members
remuneration and profit share) of GBP8.0 million.
Terms of the Acquisition
RBG has conditionally agreed to acquire Memery Crystal for total
consideration of GBP30.0 million comprising (upon completion) GBP12
million in cash, GBP11.2 million in RBG shares and a further GBP6.8
million in cash deferred over two payments on the sixth and
12-month anniversary of completion.
Part of the purchase price (GBP11.2 million) is payable by the
issue of 9,739,130 RBG ordinary shares of 0.2 pence each
("Consideration Shares"), representing a deemed price per
Consideration Share of GBP1.15 pence (being the volume weighted
average mid-market price of RBG shares in the five business days
prior to exchange of contracts). The Cash Consideration element of
the acquisition is being funded in part through a new GBP10 million
Term Facility (the "Loan"). repayable within three years at Libor
plus margin (2.4%-3.15% dependent on leverage), under four
covenants being adjusted leverage, cashflow cover, partner numbers
and litigation net cash. Under the terms of the RCF, partial pay
down must occur once every financial year for five days. The Group
has also extended its RCF to GBP15 million to assist with
liquidity.
RBG is acquiring the net assets of Memery Crystal of GBP7.1
million. The existing business of Memery Crystal will be
transferred into a limited company in exchange for shares issued to
the partners. This limited company will be sold to RBG.
Completion of the Acquisition is conditional upon, inter alia,
regulatory approval.
The Consideration Shares are subject to a lock-in agreement
including a prohibition on transfer spanning an initial period from
completion of the acquisition to the second anniversary of
completion, followed by a further one-year period to the third
anniversary of completion, whereby any shares being transferred are
subject to certain restrictions.
Issue of Equity
Application will be made to the London Stock Exchange for the
admission of the 9,739,130 Consideration Shares to AIM
("Admission"). It is expected that Admission will occur and that
dealings will commence at 8.00 a.m. on the completion date, at
which time a further announcement will be made. The Consideration
Shares will rank pari passu with the existing ordinary shares in
the Company.
Enquiries:
RBG Holdings plc Via SEC Newgate
Nicola Foulston, CEO
N+1 Singer (Nomad and Broker) Tel: +44 (0)20 7496 3000
Shaun Dobson / Alex Bond (Corporate
Finance)
Tom Salvesen (Corporate Broking)
SEC Newgate (for media enquiries) Tel: +44 (0)7540 106366;
Robin Tozer/Tom Carnegie rbg@secnewgate.com
About RBG Holdings plc
RBG Holdings plc is a professional services group, which
includes one of the UK's pioneering law firms, Rosenblatt Limited
("RBL"), which is a leader in dispute resolution.
RBL provides a range of legal services to its diversified client
base, which includes companies, banks, entrepreneurs, and
individuals. Complementing this is RBL's increasingly international
footprint, advising on complex cross-jurisdictional matters. RBL's
practice areas include banking & finance, competition &
regulatory, corporate, dispute resolution, employment, financial
crime, financial services, insolvency & financial restructuring
IP/technology/media, real estate, serious & general crime, tax
resolution, and white-collar crime.
The Group also provides litigation finance in selected cases
through a separate arm, LionFish Litigation Finance (UK) Limited
("LionFish"). LionFish finances litigation matters being run by
other solicitors in return for a significant return on the outcome
of those cases. As such, the Group has two types of litigation
investments - RBL's own client matters, and litigation matters run
by third-party solicitors. LionFish is positioned to be a unique,
alternative provider to the traditional litigation funders.
The Group also owns Convex Capital Limited ("Convex Capital"), a
specialist sell-side corporate finance boutique, based in
Manchester. Convex Capital is entirely focused on helping
companies, particularly owner-managed and entrepreneurial
businesses, realise their value through sales to large corporates.
Convex Capital identifies and proactively targets firms that it
believes represent attractive acquisition opportunities.
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END
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