MAJOR ACQUISITION IN THE BRISTOL MARKET
01 August 2007
Jelf Group plc ("Jelf"), a corporate and financial consultancy group, is pleased to announce that it has acquired the entire issued share capital of Bristol-based insurance broker, John Lampier and Son Ltd ("Lampier"), and as part of the transaction, 100% of Lampier Professions Ltd.
Deal Highlights:
- The initial consideration for the acquisition is £12.756m (subject to adjustment), payable at completion in a mixture of cash and new ordinary shares. Further consideration of an estimated £6.869m following the achievement of incremental targets is payable in cash over a two-year Earn Out period.
- Lampier was the last sizeable independent commercial insurance broker in the Bristol market. The acquisition of Lampier makes Jelf the dominant broker in the Bristol market.
- On a national level, the acquisition consolidates Jelf Group's position as one of the top ten independent insurance brokers in the UK
- Lampier's £35m of insurance premiums will be consolidated with the Jelf Group total of £115m, increasing the enlarged group's aggregate premium total by over 30% to around £150m. This is in addition to the £125m of healthcare premiums that Jelf already places on behalf of clients.
- The insurance business will benefit from enhanced buying powers of the enlarged group.
- A key attraction to Jelf is Lampier's specialist professional indemnity (PI) team; it will be re-branded Jelf and will develop a group wide professional services offering.
Bob Hearne is remaining as managing director of Lampier and will join the Jelf operating board. The majority of the other directors are remaining in their previous roles. Three Directors are retiring.
The deal fits with Jelf Group's stated strategy of acquiring strong, profitable insurance brokers in Southern England and South Wales. The combined Jelf-Lampier entity will create a strategic barrier to competitors entering the market in the South West and is expected to lead to further acquisitions in the region.
The Jelf Board believes that the application of enhanced buying power of the acquisition, plus the investment to be undertaken, coupled with the targets set for the earn-out, will generate profits going forward.
"Jelf and Lampier have complimentary areas of expertise and working together we will achieve a commanding presence in and across the whole of the South West; there is tremendous potential for growth," says Alex Alway, chief executive of Jelf Group.
Lampier managing director Bob Hearne adds: "The insurance market is changing rapidly and scale is increasingly important in order to provide the best possible support for clients. Working with the Jelf Group gives us the opportunity to retain our Bristol roots, offer our clients a greater range of services and secure a future for our staff."
Terms of the Acquisition
Initial consideration of £12.756m ("Initial Consideration") is payable upon completion in a mixture of cash and new ordinary shares of Jelf. The Initial Consideration is subject to an adjustment for Lampier's net assets/liabilities as at completion and further adjustment if the designated earn-out targets are not met.
The Initial Consideration is a cash payment of £10.973m and £1.783m being satisfied by the issue of 694,418 new ordinary shares of 1p each at an issue price of 256.8 pence per share, credited as fully paid ("the Consideration Shares").
Further consideration, estimated at £6.869m ("Earn Out"), is payable in cash in two tranches following completion following full achievement of agreed incremental performance targets.
The total of the initial consideration and the Earn Out is estimated at £19.625m; however, this is only payable if all the designated and agreed targets are achieved in full.
In addition, by way of further consideration, payments relating to the introduction of new clients to Jelf or its group members during the Earn Out period is also payable.
The acquisition agreement contains warranties, indemnities, and restrictive covenants given by certain of the vendors.
Funding
The cash element has been financed out of a new £30m facility with the Royal Bank of Scotland Plc ("the Bank"), which will replace the existing facility.
Jelf has today applied for 694,418 new ordinary shares (being the Consideration Shares) to be admitted to AIM. Admission is expected take place on 7th August. Save for Mr Squires, Mr New, and Mr Lewis (who are retiring upon completion) all of the vendors will remain with Lampier in either a senior management or director capacity. As a result the company now has 25,562,894 shares in issue.
The acquisition agreement provides for lock-in arrangements in respect of the Consideration Shares under which for a period of two years following completion, the vendors are not permitted to dispose of the Consideration Shares (save in some limited circumstances).
About Lampier
After Jelf, Lampier is the largest privately-owned independent insurance broker in the Bristol market. Lampier handles around £35m of premiums on behalf of clients. This will be consolidated with the Jelf Group total of £115m, to increase the enlarged group's aggregate premium total to around £150m, in addition to the £125m of healthcare premiums that the Jelf Group places on behalf of clients.
In the last audited accounts to March 2007, Lampier had consolidated turnover of £6.768m, with EBITDA of £1.975m. Over the last three years, Lampier's consolidated turnover has increased 19% from £5.670m* to £6.768m. (*Proforma turnover including acquisitions during the three-year period).
The Lampier brand will be retained along side the Jelf Group brand to maximise coverage and impact. The professional indemnity team has moved to the Jelf brand in order to maximise cross-sales opportunities across the Jelf Group's existing corporate client base. Lampier and its subsidiaries ("the Lampier Group") will be managed as stand-alone company within the Jelf Group. Lampier is in the process of moving to the same back office system as the Jelf Insurance and Healthcare divisions. This will facilitate cross-group operational and financial management.
Information on Jelf Group can be accessed via its website: www.jelfgroup.com
Contact:
Jelf Group plc
01454 272 713
Alex Alway, Group Chief Executive
Pelham PR
Polly Fergusson
0207 743 6362