SHINE EXTENDS ITS REACH
Written on the 12 June 2014
SHINE Lawyers (ASX: SHJ) has extended its reach both north and west with two key acquisitions worth up to $35.5 million.
The expansionary move comes as the Brisbane-based legal group says its full-year EBITDA forecast will be at the lower end of its current guidance of $34 million to $37 million.
Shine has acquired Emanate Legal and Stephen Browne Personal Injury Lawyers in separate deals that the company describes as “strategically compelling”.
Emanate Legal is a specialist in landowner rights and has offices in Townsville, Roma and Brisbane, while Stephen Browne Personal Injury Lawyers is based in Western Australia.
The acquisitions have been described as earnings-per-share accretive and will be funded through both cash and scrip.
Shine plans to meet the $27.9 million cash component of the deal through a one-for-10 renounceable rights issue, pitched at $1.90 a share to raise $29.45 million.
This compares with Shine’s current share price of $2.30, which rose 10 per cent following the news.
The inclusion of earn-out agreements will see the total price payable by Shine for the acquisitions sit somewhere between $27 million and $35.5 million.
Shine’s managing director Simon Morrison (pictured) says the deals deliver on the company’s goals of seeking geographical diversification of its personal injury business and a higher contribution from emerging practice areas.
“The two firms have similar cultures and values to Shine,” Morrison says.
“Aside from their immediate short-term positive impact on earnings and cashflow, Emanate and Stephen Browne will contribute further to Shine’s future earnings growth as synergies are realised.”
Meanwhile, Shine says its latest trading update represents more than 20 per cent growth in EBITDA compared to the 2013 financial year.
It says the result has been built on improved productivity and a focus on cost efficiencies.
However, the result has been impacted by higher marketing costs and lower-than-expected resolution outcomes for some cases.