Watchstone shares surge as it serves court claim against PwC
By Josh White
Date: Friday 07 Aug 2020
(Sharecast News) - Watchstone Group shares were rocketing on Friday, after it said it had filed and served a claim against PricewaterhouseCoopers (PwC) in the High Court.
The AIM-traded insurance, automotive and healthcare technology firm said the claim was for damages or equitable compensation of £63m, plus exemplary damages, equitable compensation, interest and costs.
It said the claim against PwC was for breach of contract, breach of confidence, breach of fiduciary duty, or unlawful means conspiracy.
The claim arose from an "unauthorised and illicit channel of communication" between PwC, Watchstone's restructuring and technical accounting adviser at the time, and Greenhill & Co, a corporate finance adviser to Slater & Gordon UK, procured during the period of due diligence and negotiation relating to the £637m disposal of the professional services division in 2015.
"Watchstone claims that Greenhill established this back-channel with PwC by one or more secret meetings between representatives of Greenhill and PwC, at which PwC unlawfully disclosed information pertaining to Watchstone which was, and which it knew to be, confidential," the Watchstone board claimed in its statement.
"This information was then factored into S&G's tactics and strategy for the negotiations with Watchstone leading to the acquisition of the professional services division.
"S&G thereby gained an unfair advantage in those negotiations, which it exploited in order to purchase the PSD at a lower price than it would otherwise have had to pay.
"This caused Watchstone to suffer significant loss."
Watchstone said it did not discover, and was not told of, the various breaches by PwC, and was therefore unaware that its confidential information had been provided to Greenhill and S&G until it received third party disclosure from Greenhill in the proceedings with S&G on 19 July 2019 - "almost three years" after S&G's claim was first threatened.
It claimed PwC never informed Watchstone of the meeting or meetings, the disclosure or the breaches that occurred.
"Even today, PwC continues to refuse to reveal the identity, other than to confirm that the person was male, of the PwC representative who met with and communicated with Greenhill.
"It has, however, confirmed that that individual attended a meeting on 15 January 2015 with Greenhill and that he was contacted by them on another occasion in February 2015 to seek to arrange a further meeting."
Watchstone said it paid PwC more than £5m in fees in 2014 and 2015 for its independent review into, among other things, group accounting policies and cash generation.
It said PwC had no role in respect of the disposal of the PSD.
"Watchstone will make further announcements in due course, as appropriate."
At 1316 BST, shares in Watchstone Group were up 44.44% at 72.94p.
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