Acquisition of T-three Group, Issue of Equity and Total Voting Rights
Gateley (Holdings) Plc (AIM:GTLY), the legal and professional services group, is pleased to announce the acquisition of T-three Group (“T-three”) for a consideration of £3.4m (the “Acquisition”).
T-three complements Kiddy & Partners (“Kiddy”), which Gateley acquired in July 2018, and together these businesses create one of the largest specialist Human Capital consultancy businesses in the UK.
T-three offers services and products to businesses that enable them to develop their senior people and effect cultural change within the business itself. Its client base includes multinational companies, large public sector organisations and SMEs across the UK and worldwide. T-three is based in Cambourne, Cambridge and employs 35 staff.
T-three is an established, profitable and cash generative business and it will continue to trade under its existing name from its offices in Cambourne. In the year ended 30 September 2019, T-three generated pro-forma revenues from continuing operations of £4.2m and EBITDA of £0.7m. The Board expects the acquisition to be immediately earnings enhancing.
Background to T-three
Established in 1996 by founder and CEO, Jill Jenkinson, T-three’s core services include leadership development, behavioural change programmes and people and management development programmes. T-three regularly delivers leadership development programmes for large groups of senior personnel within UK based organisations. Its clients include the BBC, NCP, Jaguar Land Rover, Samsung and Transport for London.
Terms of the acquisition
Under the terms of the Acquisition, Gateley will acquire T-three for a consideration of £3.40m on a debt free, cash free normalised level of working capital basis. The initial payment on completion will be approximately £3.17m settled 50% in cash and 50% by the issuance of 944,855 ordinary shares of 10 pence each in the capital of Gateley (“Ordinary Shares”) at a price of £1.658 per Ordinary Share. Deferred consideration of up to £0.90m is payable based on performance over financial years ending 30 September 2019, 30 September 2020 and 30 September 2021. Deferred consideration will also be settled 50% in cash and 50% in Ordinary Shares valued at the average 30 day closing price of an Ordinary Share on the last practicable date as the deferred consideration falls due.
The Acquisition of T-three significantly broadens Gateley’s Human Capital services which already include legal, pension trustee advice, global mobility and strategic consultancy services across assessment, selection, management and development of people through Kiddy.
Kiddy is a leader in delivering services to businesses looking to improve the performance of their leaders and senior managers. Kiddy's key strengths lie primarily in leadership assessment whilst T-three is strong in leadership development. The opportunity for Kiddy and T-three to collaborate, build on each business' strengths and grow their experience collectively, puts Gateley in a strong market position to create one of the largest specialist Human Capital consultancy businesses in the UK.
Issue of new Ordinary Shares
As part of the consideration payable on completion 944,855 Ordinary Shares are to be issued. Application will be made to the London Stock Exchange for the 944,855 new Ordinary Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will take place at 8.00 a.m. on 19 December 2019.
The new Ordinary Shares will rank pari passu with the existing Ordinary Shares in issue. Following Admission, Gateley's total issued share capital will comprise 114,714,692 Ordinary Shares. This number may be used by shareholders in Gateley as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of Gateley under the FCA's Disclosure Guidance and Transparency Rules.
Commenting on the Acquisition, Gateley CEO, Michael Ward said:
“We are delighted to welcome the T-three team to our growing, successful group. We see huge potential from the Acquisition in further expanding our Human Capital consultancy services, as T-three and Kiddy play to each other's strengths and fit well alongside our legal teams. T-three is another good example of the execution of our stated plan of being able to diversify our business and offer clients complementary business services that support the delivery of our legal services. It will sit within our Employment and Pensions group.
“Kiddy has made excellent progress as part of Gateley and demonstrated growth of almost 37% ahead of our original expectations, generating £3m of fees since acquisition. The opportunity to leverage the strengths of both T-three and Kiddy in the Human Capital space is a really exciting one for us all, particularly given the skills and experience within their teams and the calibre of clients both businesses have in their portfolios.”
Jill Jenkinson, founder and CEO of T-three said:
"This is a natural next step for T-three and we’re joining a group that we feel is the right cultural fit for us, that shares the vision for how we want the business to grow and places a relentless focus on the client; with clients being front and centre of how we all do business.
"In addition, we can see masses of potential for working with Kiddy. We are all experienced in helping individuals, teams and organisations make behavioural changes that will transform what they do and the cultures they work within. Alongside that, being part of a legal and professional services group that is focused on building one of the biggest and best Human Capital consultancies in the UK is something we are all excited about.”