LONDON (ShareCast) - (Sharecast News) - Legal and professional services company Knights Group has agreed to acquire Archers Law, it announced on Monday, which is an independent law firm based in Stockton-on-Tees.
The AIM-traded firm said that under the terms of the acquisition, it was acquiring Archers from its four existing equity partners on a debt-free, cash-free basis for a total consideration of £5.2m, subject to working capital adjustments at completion.

It said that would comprise an initial consideration of £3.7m, made up of £2.1m in cash and £1.6m in 395,060 new shares in Knights, £0.2m of which would be issued to fixed share members, along with deferred cash consideration of £1.5m to be paid in equal instalments over the three years following completion.

The cash consideration would be satisfied from Knights' existing facilities, with completion expected to take place on 26 November.

Knights said Archers, established in 1860, is one of the leading full-service independent law firms operating in the Teesside area.

The acquisition would see 38 fee earners joining Knights, and would be Knights' 17th location, expanding Knights' presence into the north east region, one of the largest markets outside of London for legal and professional services in the UK.

It said the acquisition was in line with the group's strategy to accelerate its organic growth through "carefully-targeted" acquisitions, which were a "strong" cultural fit.

In its unaudited accounts for the year ended 31 March, Archers reported revenue of £4.0m with a corporatised profit before tax margin of about 20%.

Following full integration and the realisation of all synergies, the board said it expected Archers to contribute a profit before tax margin of around 30% which, combined with a typical level of revenue churn post-acquisition, meant the acquisition was expected to be immediately earnings enhancing.

"We are delighted to announce the acquisition of Archers, a leading law firm in Teesside which further expands our footprint into the north east, a region currently undergoing significant public and private investment," said chief executive officer David Beech.

"The acquisition allows us to build on the existing strong presence we have established in Yorkshire in recent years and provides a compelling platform for future organic growth in the north east, as we cement our position as the leading legal and professional services business outside London."

At the same time on Monday, Knights also announced that it had agreed a new extended revolving credit facility with HSBC UK, Allied Irish Bank Great Britain (AIB), and Lloyds Bank.

The company said the facility would provide total committed funding of £60m until October 2024, split equally between HSBC, AIB and Lloyds.

It replaced its existing £40m facility with HSBC and AIB, with the three banks providing "increased flexibility" to the group at "effectively the same interest cost" to the Company.

"The facility will provide us with additional headroom to build upon the critical mass achieved this year, continue to scale our business across the UK organically and through selected acquisitions, and execute our strategy to become the leading legal and professional services business outside London," David Beech said.

At 0910 GMT, shares in Knights Group Holdings were up 2.53% at 405p.

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