DWF to acquire leading Canadian law firm
07/11/2022 07:00
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RNS Number : 4529F DWF Group PLC 07 November 2022
DWF Group plc
("DWF", the "Group" or the "Company")
7 November 2022
DWF to enter Canadian legal market with acquisition of Whitelaw Twining
DWF, the global provider of integrated legal and business services, is pleased
to announce that it has reached an agreement to acquire Whitelaw Twining Law
Corporation, a leading independent law firm headquartered in Vancouver,
Canada, and TWK Management Limited, an intra-group services company
(collectively, "Whitelaw Twining").
Highlights
· Whitelaw Twining is a Canadian law firm specialising in
insurance, commercial litigation, personal injury and dispute resolution
· Acquisition brings a strong strategic fit, greater scale and an
enhanced platform in North America
· Clear synergy opportunity with DWF's existing Canadian claims and
adjusting businesses and global insurance sector focus
· Acquisition is valued at up to CA$42.6m (£27.7m) 1 (#_ftn1)
with total consideration of up to CA$26.0m (£16.9m), payable in shares and
cash, and debt of CA$16.6m (£10.8m) to be repaid or assumed
· Whitelaw Twining revenue was CA$34.5m (£20.0m) and pro forma
EBITDA (adjusted to DWF reporting) was CA$5.3m (£3.0m), in 2021
· The Whitelaw Twining acquisition is expected to be earnings
enhancing in the first full year of ownership
Whitelaw Twining overview and strategic rationale
Whitelaw Twining is a full-service litigation law firm specialising in
insurance, commercial litigation, personal injury and dispute resolution
offering a strong strategic fit and clear business overlap with DWF,
especially its focus on the London insurance market.
Founded in Vancouver in 1979 as a boutique three-partner law firm, Whitelaw
Twining now has 16 partners and more than 200 people in total, with offices in
Vancouver and Calgary. Its management team consists of Daniel Shugarman
(Country Managing Partner), Kim Wigmore (Head of Business Development) and
Michael Silva (Head of Operations).
The transaction marks the next step in DWF's North American strategy and will
result in an integrated legal and business services offering in Canada which
will also align to the Group's existing Mindcrest and claims operations in
Chicago.
Whitelaw Twining financial performance
Whitelaw Twining's reported revenue for the 12 months ended 31 December 2021
was CA$34.5m (£20.0m), with pro forma EBITDA of CA$5.3m (£3.0m) (adjusted to
reflect DWF's partner compensation and reporting policy). Whitelaw Twining's
gross assets at 31 December 2021 were CA$21.6m (£12.6m).
Financial benefits of the transaction
Based on the existing working relationship between the two firms, DWF
identified a strong strategic and cultural fit with Whitelaw Twining,
providing DWF with the ideal platform to strengthen its market position in
Canada with legal services that complement existing claims and adjusting
businesses. The two firms have global insurer clients which consistently
feature among the top 10 clients of each business, with the potential to
develop new client opportunities in the Canadian market and elsewhere. This
also creates a tangible opportunity to capture referral work through DWF's
existing claims management and adjusting practice in Vancouver and Toronto.
DWF prudently estimates that the transaction will therefore allow it to
deliver around $0.9m (£0.6m) of synergy-led EBITDA enhancement to Whitelaw
Twining on an annual run-rate basis by FY24.
The Whitelaw Twining acquisition is expected to be earnings enhancing in the
first full year of ownership, and the cash payments will be funded from the
Group's debt facilities and existing cash resources. More detail of the cash
and share payments is set out below. If the transaction had been completed on
30 April 2022, it would have added 0.11x to the leverage (net debt / EBITDA on
an IFRS basis) of the Group. We expect deleveraging beyond the current
financial year to be driven by profitable growth and strong cash generation,
providing ongoing flexibility for continued growth in the business and the
delivery of shareholder returns.
Sir Nigel Knowles, Group CEO at DWF, said: "We are delighted to be enhancing
our offering in the Canadian legal market. Whitelaw Twining is one of the
country's top legal businesses and represents a high quality opportunity for
our clients. It also allows us to expand our claims and adjusting presence in
Canada and wider Connected Services and Mindcrest capabilities in North
America.
"We have worked hard to ensure DWF is in a strong position so we can
confidently make these key international acquisitions, enabling us to make
further progress against our strategy to be the preeminent global provider of
integrated legal and business services.
"I look forward to working with our new colleagues. We identified a strong
cultural fit with the Whitelaw Twining management team and the values and ways
of working within their business. Their emphasis on internal collaboration
over competition and on creating a progressive, innovative, and supportive
working environment reflect our own 'one team' culture."
Daniel Shugarman, Country Managing Partner of Whitelaw Twining, said:
"We are excited to be forming a partnership with the DWF Group, combining our
respective Legal Advisory and Connected Services capabilities for the benefit
of our clients. Over 40 years, Whitelaw Twining has gone from a three-person
practice in Vancouver to a diverse, full-service litigation law firm serving
clients in 17 languages. This is the next step forward for our business,
further strengthening our position in Canada and creating opportunities for
our colleagues to support clients globally.
"We already know DWF well, in particular, its Canadian claims and adjusting
practice. We recognise the shared values and 'one team' approach of our two
businesses and we are delighted that through DWF Group's listed company status
we are able to make our Whitelaw Twining colleagues shareholders with an
opportunity to benefit from our future success."
Acquisition terms
The acquisition is valued at up to CA$42.6m (£27.7m) with a maximum
consideration of up to CA$26.0m (£16.9m) payable in shares and cash, and the
assumption or repayment of debt of CA$16.6m (£10.8m), with completion
anticipated by the end of 2022.
Initial consideration consisting of an estimated CA$17.8m (£11.5m) in newly
issued DWF shares will be paid on 3 January 2023 (the "Initial
Consideration"). Cash consideration of CA$4.4m (£2.9m) will be paid in
February 2023. Contingent share consideration with a value of up to $3.0m
(£2.0m) may be paid provided certain 2022 calendar year financial targets and
criteria are met.
As part of the transaction, the Group will assume estimated external net debt
of CA$5.9m (£3.8m) and repay shareholder debt of CA$10.7m (£7.0m). Of this
shareholder debt, CA$9.2m (£6.0m) will be repaid on completion with the
remaining balance of CA$1.5m (£1.0m) payable in February 2023. This will be
offset by partner capital contributions from the Whitelaw Twining shareholders
of $2.0m (£1.3m), due by February 2023.
For the share element of the consideration, DWF will issue 16,504,757 new
ordinary shares in the Company (the "Consideration Shares") on 3 January 2023.
These will be subject to the customary lock-up period of approximately five
years, in line with the Group's existing agreements.
In addition, an Employee Share Program will be created with a value of $0.8m
(£0.5m) for the purpose of remunerating and incentivising employees of
Whitelaw Twining by 31 December 2022. The Employee Share Program may be
provided on an equity-settled or cash-settled basis.
A partnership will also be established in British Columbia to provide Legal
Advisory and Connected Services through the operations of Whitelaw Twining and
DWF's existing loss adjusting practice in Ontario, whilst a relationship
agreement will be entered into between DWF and Whitelaw Twining's Alberta
practice.
The completion of the acquisition is subject to the satisfaction of certain
pre-conditions, which are expected to be met by the end of 2022. Following
issue, application will be made for the Consideration Shares to be admitted to
the Official List of the Financial Conduct Authority and to trading on the
London Stock Exchange's main market for listed securities and a further
announcement will be made in due course.
For further information:
DWF Group plc
James Igoe
+44(0)7971 783533
Head of Communications & IR
H/Advisors Maitland
Sam Turvey or Sam Cartwright
+44(0)20 7379 5151
About DWF Group
DWF is a global provider of integrated legal and business services provided
through its three offerings of Legal Advisory, Mindcrest and Connected
Services. It has approximately 4,000 people and offices and associations
located across the globe. The Company became the first Main Market Premium
Listed legal business on the London Stock Exchange in March 2019. DWF recorded
revenue of £350.2 million in the year ended 30 April 2022. For more
information visit: dwfgroup.com
DWF's three divisions represent its single Integrated Legal Management
approach through which the Group can seamlessly combine any number of these
services to deliver bespoke solutions to its clients with greater efficiency,
price certainty and transparency. This approach enables DWF to offer clients
solutions that combine traditional law firm services with new, modern legal
and business services relevant to today's companies and the challenges and
opportunities they face.
About Whitelaw Twining
Whitelaw Twining is a full-service litigation law firm, founded in Vancouver
with over 150 fee earners in its Vancouver and Calgary offices. It is an
industry leader in the fields of insurance, commercial litigation,
construction, plaintiff's personal injury and alternative dispute resolution
services. Whitelaw Twining is an innovative, passionate team, building
long-term relationships with local, national and international clients for
more than 40 years.
Forward looking statements
This announcement contains certain forward‐looking statements with respect
to the Company's current targets, expectations and projections about future
performance, anticipated events or trends and other matters that are not
historical facts. These forward‐looking statements, which sometimes use
words such as "aim", "anticipate", "believe", "intend", "plan" "estimate",
"expect" and words of similar meaning, include all matters that are not
historical facts and reflect the directors' beliefs and expectations and
involve a number of risks, uncertainties and assumptions that could cause
actual results and performance to differ materially from any expected future
results or performance expressed or implied by the forward‐looking
statement.
1 Based on the Bank of Canada Daily Exchange Rate published on 3 November
2022 (£1:CA$1.5379)
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