LONDON (ShareCast) - (Sharecast News) - Legal and professional services company Knights Group announced the exchange of contracts on Friday to acquire Nottingham-based full-service law firm Fraser Brown Solicitors.
The AIM-traded firm said the acquisition would strengthen its presence in the East Midlands, in line with its strategy to accelerate its organic growth through "carefully targeted" acquisitions that it saw as a strong cultural fit.

Established more than 250 years ago in Nottingham, Knights said Fraser Brown had grown to become one of the city's largest independent law firms, offering a "broad spectrum" of commercial and private client legal services to clients across the East Midlands.

The acquisition would see 81 fee earners join Knights, increasing its presence in the region alongside its existing operations.

In its unaudited accounts for the year ended 30 June 2019, Fraser Brown achieved revenue of around ?7.5m, with a corporatised profit before tax margin of about 10%.

Following full integration, including the delivery of cost synergies, the board of Knights said it expected Fraser Brown to deliver a profit before tax margin of over 15%.

The acquisition was expected to be earnings-enhancing in the first full financial year post-acquisition.

"We are pleased to announce the agreement to acquire Fraser Brown, one of the largest independent law firms in Nottingham, a key city for business in the East Midlands," said Knights Group chief executive officer David Beech.

"With its local and national client base and broad spectrum of work, the combination of Fraser Brown with our existing presence in the East Midlands will position us as one of the leading legal and professional services firms in the region.

"We are delighted to build on our strong momentum following the three acquisitions announced in the period to date, which is a testament to Knights' ability to attract high calibre businesses to the group."

Under the terms of the acquisition, Knights said it would acquire Fraser Brown from its existing eight equity partners on a cash-free, debt-free basis for a total consideration of up to ?8.28m.

That would comprise ?2.83m in cash, payable on completion, and the issue of ?3.03m in 680,911 new ordinary shares in Knights to the sellers, along with deferred cash consideration of up to ?2.42m, to be paid in instalments on the first and second anniversary of completion, subject to certain conditions being met.

The cash consideration would be satisfied from Knights' existing facilities, with completion expected to take place on 27 March.

"With its ambitious culture and strong reputation, we see Knights as a good match for us," said Freser Brown chief executive Patrick Wood.

"Having expanded recently, we look forward to continuing to grow our presence in the East Midlands as part of a larger group."

At 0945 GMT, shares in Knights Group were up 5.07% at 465.44p.

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