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Northgate to acquire Redde
Posted on Monday, 02 December 2019 13:47
Northgate has agreed to buy UK-based accident management services company Redde for GBP 402.03 million.
The buyer is offering 0.37 per stock, or GBP 1.28 for every share held, representing a premium of 18.5 per cent to the target’s close of GBP 1.08 on 28th November, the last trading day prior to the deal being announced.
Northgate and Redde’s shareholders will own 54.0 per cent and 46.0 per cent stake in the combined business, respectively.
Furthermore, the deal remains subject to stockholder approval and the green light from the Financial Conduct Authority and the Solicitors Regulation Authority.
The transaction, which also includes the sale of the target’s patents, is due to close in the first quarter of 2020.
Upon completion, the combined business will be named Redde Northgate.
Bath-headquartered Redde provides bespoke claims management, legal and specialist accident management services for the motor insurance sector.
It has over 2,400 employees across the UK and operates through six main businesses, including Auxilis, NewLaw Legal, Cab Aid and FMG Group Support.
For the financial year ended 30th June 2019, Redde posted revenue of GBP 589.72 million, up 11.9 per cent from GBP 526.98 million in the corresponding period of 2018.
As a result of the acquisition, the two business will create a leading integrated mobility and automotive services platform which spans the vehicle life-cycle, namely within maintenance, repair, recovery and incident management.
Northgate will also broaden its capital-light fleet activities and strengthen its offering for customers.
The deal is expected to generate annual pre-tax cost savings of at least GBP 10.00 million, as well as a target run-rate phasing of GBP 7.00 million in the first 12 months following closing and a further GBP 10.00 million by year two.
Avril Palmer-Baunack, non-executive chairman of Northgate, said: “This merger represents an attractive opportunity for both companies to further enhance their market-leading positions, delivering synergies, customer benefits and shareholder value.”
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