Listed firm Knights has expanded into the north east for the first time with a £5.2m deal to buy a practice in the region. The group announced to the London Stock Exchange today that it had agreed to acquire Archers Law LLP, based in Stockton-on-Tees, taking on 38 fee earners.
Under the terms of the acquisition, Knights will buy Archers from its four existing equity partners for what could eventually be worth £5.2m. This comprises £2.1m upfront in cash and £1.6m in 395,060 new ordinary shares in Knights. A further £1.5m will be paid in equal instalments over the next three years following completion, which is expected to take place on 26 November. The cash payments are being made from Knights’ existing facilities.
Archers, established in 1860, posted revenue of £4m for the year ended 31 March, with a profit margin of 20%. Knights said it expects the firm to contribute a profit margin of 30% after the acquisition and to be immediately earnings enhancing.
David Beech, chief executive of Knights (pictured), said the north east region is currently significant public and private investment and was ideal for continuing the firm’s ambition to expand in areas outside of London. Archers will become the 17th Knights office across England.
Chris Todd, Archers partner, added: ‘We look forward to executing on the significant growth opportunities in the North East as part of a larger group, which will allow us to offer greater resources and capabilities to our clients in the region and beyond.’
Knights also announced a new extended revolving credit facility with HSBC, Allied Irish Bank and Lloyds Bank, providing total funding of £60m until October 2024. This replaces the existing £40m facility with HSBC and Allied Irish.
Beech said: ‘The facility will provide us with additional headroom to build upon the critical mass achieved this year, continue to scale our business across the UK organically and through selected acquisitions, and execute our strategy to become the leading legal and professional services business outside London.’
Shares in Knights plc rose 1.9% to 402.5p this morning.
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