London firm Gordon Dadds is in talks over a possible reverse takeover that would involve the firm being listed on the London Stock Exchange.
The board today confirmed it is in 'advanced negotiations' regarding a possible share offer for the company by a listed shell company, investing business Work Group.
The buying company intends to raise up to £20m through an accelerated bookbuild placing of up to 457m new ordinary shares at a price of 4.375p per share to institutional investors.
The proceeds of the placing, expected to be up to £18m, will be used primarily to fund acquisitions and for working capital, and also to repay a small amount of borrowings by Gordon Dadds.
Gordon Dadds has bought out a number of struggling firms in recent years, including Prolegal, Jeffrey Green Russell and Davenport Lyons. In November, Gordon Dadds announced that it was merging London-based UK immigration specialist Platt & Associates with its existing employment team.
The Work Group acquisition will provide Gordon Dadds shareholders with a public quotation for their equity interest in the firm by being part of a company that is already admitted to AIM with an established shareholder base.
Work Group was incorporated in 1999 as an employment and media business. It sold its consultancy and resourcing operations to outsourcing giant Capita for £2m in December 2015, allowing the company to turn itself into an investment vehicle. According to results for 2016, published last month, directors had been 'managing the legacy assets and liabilities of the business to maximise cash resources with a view to using them to acquire a new trading business through a reverse takeover’.
Work Group recorded barely any revenue or profit for past year. It updated the stock market in March to say work was ongoing on a reverse takeover after it had entered a memorandum of understanding with a potential acquisition in the business services sector. Shares in Work Group have been suspended since December 2016 pending publication of the acquisition details.
According to the Law Society's Find a Solicitor service, Gordon Dadds has 126 lawyers working from three offices in London, Cardiff and Bristol. Its roots date back to 1920 when it was founded in London by a divorce lawyer who had just left the army.
*This article was amended on 12 July at the firm's request to state that only a small amount of the proceeds of the placing will be used to repay borrowings by Gordon Dadds.
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