AF Legal Group Ltd (ASX:AFL) announces that it has executed a share sale deed to acquire 100% of the issued share capital of GTC Legal Group Holdings Pty Ltd, the holding company of Armstrong Legal and other legal firm brands (together, “GTC”), subject to satisfaction of customary conditions, including AFL obtaining the required approvals from its shareholders (Proposed Merger).
The Proposed Merger will create one of the largest personal services legal firms in Australia with pro-forma FY22 revenue of $40.8 million, EBITDA of $8.8 million and EBITA of $6.2 million. Pro forma numbers exclude immediate and long-term revenue and expense synergies that are currently being quantified and expected to be material.
The Proposed Merger is 40% EBITA per share accretive (pre synergies) for AFL shareholders, with proforma FY22 EBITA per share increasing from 3.5 cents per share to 4.9 cents per share.
The Proposed Merger is unanimously endorsed and supported by the Board of AFL.
- Australian Family Lawyers has entered into an agreement to merge with GTC Legal Group
- The merger will create one of the largest personal services legal firms in Australia
- The transaction is materially earnings and value accretive on a proforma FY22 basis before synergies
AFL Executive Director Grant Dearlove said, “The merger of AFL and GTC is a seminal moment for the personal legal services industry in Australia with the combined group being uniquely positioned in a $20 billion4 market ripe for consolidation. For shareholders, it delivers immediate scale, increased revenue and profitability and a more diversified earnings base from family law only to an additional six practice areas. We will have new exposure to the fast-growing revenue-sharing platform model which is challenging the traditional law firm model in regions such as the UK, and our geographic footprint will increase from 19 to 26 offices under seven quality and recognised brands. The integration of our complementary businesses will drive immediate and long-term increased revenue and expense synergies, with a significant reduction of duplicated costs already identified. The merged group will have a strengthened board and leadership team with proven track records in legal firm disruption and consolidation”.
GTC Managing Director, James Stevens added, “Put simply, the merger of GTC and AFL marks the true beginning of the consolidation of the personal legal services market in Australia – a development that is long overdue. The combined resources of the new group will provide it with all the tools it needs to grow and adapt to a rapidly changing world. Our enhanced national presence, top-tier administrative efficiencies and a strong record of client acquisition will present a compelling business going forward.”