Excerpts from official announcement to ASX:
Grant Dearlove Executive Chairman of AFL commented, “We are excited to merge with the Watts McCray team. …. This merger also expands our combined offering to a new more ‘affluent’ segment of the legal market such as wealthy complex large estate and asset disputes for clients locally and around the globe.”
Jackie Vincent Managing Director of Watts McCray commented, “We have observed how successfully AFL has disrupted the family law market and grown its national footprint since listing on the ASX. Our team shares the same strategic vision for the family law market both in Australia and internationally. We believe that that our merged businesses will accelerate the growth of the combined businesses and offer Australians more ways to retain and receive the best family law service possible. This is an exciting period for both businesses, our clients and our staff”.
The targeted completion date for the transaction, which is subject to the completion of due diligence by the Company, is April 2021. The transaction is expected to be earnings accretive for the Company and will result in a change in the Company’s scale of its activities.
The consideration to be paid to the vendors of Watts McCray for 100% of its shares includes $0.375m in upfront share consideration and $1.125m in deferred share consideration. The deferred share consideration will be paid in three annual instalments subject to minimum performance conditions at the completion of the financial periods ending 30 June 2021, 30 June 2022 and 30 June 2023. As part of the transaction, the Company will absorb an existing debt facility of $1.500m. The Company intends to extinguish that facility on completion with a combination of existing cash reserves and the proceeds from the entitlement offer as announced by the Company on 18 February 2020. The transaction will otherwise be completed on a cash free and debt free basis.
Grant Dearlove Executive Chairman of AFL commented “The individual vendors of Watts McCray will continue to work in the business in their existing capacity and also work closely with the Board to grow the national platform. Their election to accept their transaction consideration in shares in the Company is symbolic of their desire and motivation to grow the combined business for the benefit and alignment of all shareholders”.