Shares soared to year-highs Gateley Holdings PLC (LON:GTLY) as the law firm continued to branch out with the £3.4mln acquisition, set to create “one of the largest specialist human capital consultancy businesses in the UK”.
New addition T-three’s clients include the BBC, Jaguar Land Rover and Samsung, where Gateley said it sees a “really exciting opportunity” to leverage the strengths of both T-three alongside Kiddy & Partners, which it acquired in July 2018.
Gateley, which specialises in commercial law and professional services, is diversifying its business to offer clients “complementary business services that support the delivery of our legal services”.
The acquisition is expected to be “immediately earnings enhancing”, with T-three generating revenues of £4.2mln and underlying earnings (EBITDA) of £700,000 in the year ended 30 September.
It will buy T-three for an initial £3.17mln payment half in cash and half by issuing of 944,855 new shares, which are expected to be admitted to AIM trading on 19 December.
In addition, a deferred payment of up to £900,000 is payable based on yearly performance until the end of September 2019, 2020, and 2021, also to be settled in cash and shares.
Back in July, Gateley’s revenues topped £100mln for the first time, helped by three acquisitions over the year as the number of fee earners rose 20% to 610.
Gateley’s chief executive, Michael Ward, said: “The opportunity to leverage the strengths of both T-three and Kiddy in the human capital space is a really exciting one for us all, particularly given the skills and experience within their teams and the calibre of clients both businesses have in their portfolios."
He added: "Kiddy has made excellent progress as part of Gateley and demonstrated growth of almost 37% ahead of our original expectations, generating £3m of fees since acquisition."
Broker FinnCap kept its target price unchanged at 210p, saying "Gateley’s proven model retains good growth prospects, supported by the addition of high quality staff and acquisitions", which It said puts "positive pressure" on its forecast of 8% sales growth for the full year.
Shares rose 3% to 178.8p in mid-morning trading on Friday.