Shares of Australian law firm, Shine Corporate Ltd (ASX: SHJ), today trended as much as 1.56% lower, on the back of an update this morning.
In a statement to the ASX, Shine said it has entered into an agreement to acquire West Australian law firm, Bradley Bayly, a specialist in personal injury and large catastrophic injuries.
The deal is expected to be completed by August 14 and will cost $13.275 million. It'll be mostly funded by debt, with just a $1 million scrip offer (i.e. shares in Shine Corporate). The deal is expected to be earnings per share (EPS) accretive in its 2016 financial year.
"Post completion of this transaction, Shine will have a stronger presence in Western Australia in the PI areas with our Stephen Browne business," Shine's Managing Director, Simon Morrison, said. "In addition to meeting our strategic acquisition criteria, the firm has similar cultures and values and will contribute to Shine's future earnings growth as synergies are realised."
Is it time to buy Shine Corporate shares?
After a declining share price in 2015 (it was down 22% in the first six months of this year), Shine's share price has jumped 12.4% over the past five days – up until today. Make of that what you will.
Following the fall of Slater & Gordon Limited's (ASX: SGH) share price throughout 2015, it's possible investors had become concerned about the strategies employed by law firms seeking to 'roll up' the industry by buying smaller rivals.
However, personally, I think Shine has done a good job of acquiring businesses to date, and likely deserves a spot on your watchlist.
