LONDON (ShareCast) - (Sharecast News) - Legal and professional services company Knights Group has agreed to acquire independent Sheffield-based commercial law firm Keebles, it announced on Tuesday.

The AIM-traded firm said the acquisition would see 138 fee earners join Knights, providing entry into Sheffield and complementing its existing presence in Nottingham and Leeds.

It said the acquisition of Keebles strengthened Knights' presence in Yorkshire, in line with the group's strategy to accelerate its organic growth through "carefully targeted" acquisitions which are a strong cultural fit.

In its unaudited accounts for the year ended 30 April 2020, Keebles reported revenue of £12.7m, and was budgeting revenue of £12.2m in the year ended 30 April 2021, with a corporatised profit before tax margin of around 5%.

Following full integration and realisation of all synergies, the Knights board said it expected Keebles to contribute a profit before tax margin of around 18% which, combined with a typical level of revenue churn post-acquisition, meant the purchase was expected to be immediately earnings-enhancing.

Under the terms of the acquisition, Knights will acquire Keebles from its 10 existing equity partners on a cash-free, debt-free basis for total consideration of £11.54m, subject to working capital adjustments at completion.

That would comprise an initial consideration of £8.41m, made up of £4.91m in cash and £3.5m in 791,990 new ordinary shares in Knights, along with deferred cash consideration of £3.13m to be paid in equal instalments over the two years following completion.

The cash consideration would be satisfied from Knights' existing facilities, with completion expected on 11 June.

"We are delighted to announce the acquisition of Keebles, a business with an exceptional cultural fit and talented team of lawyers with a strong reputation across Yorkshire and beyond," said chief executive officer David Beech.

"Having grown our position significantly in Leeds and York, Keebles provides us entry into the important city of Sheffield and the wider South Yorkshire area, allowing us to join up our presence across the region and execute our ambition to become the leading legal and professional services business outside London."

At 0919 BST, shares in Knights Group were down 0.73% at 441.75p.

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