Slater & Gordon is suing insurance, tech and healthcare company Watchstone for £600m over a deal made in 2015 to acquire the professional services division of the company when it was called Quindell.
The law firm claims that the former CEO of Quindell overstated the worth of the division when there were talks for S&G to acquire it in 2014.
Slater & Gordon claims the firm suffered from financial difficulty as a result of the failed acquisition. The firm suffered a £493m loss in the first six months of the 2015/16 financial year after an FCA investigation into Quindell’s profit figures led to the numbers being restated.
Watchstone Group announced on the London Stock Exchange today that it had received a claim by Slater & Gordon for £600m, which a source said was “entirely expected”. S&G intends to bring proceedings forward by the end of this month.
The Watchstone statement read: “Further to its announcement on 30 November 2016, Watchstone Group plc has now received further correspondence from a firm of solicitors acting for Slater and Gordon Limited stating that it intends to issue proceedings by the end of this month. Its letter states that SGH intends to make a claim for a total amount of approximately £600m on the basis that but for fraudulent misrepresentation it would not have entered into the transaction at all.
“A groundless claim for fraudulent misrepresentation was dismissed by the independent barrister in respect of the warranty escrow process relating to the sale of the Professional Services Division in November 2016 (“Opinion”). The Opinion, which was formed on the basis of evidence provided by both SGH and Watchstone, stated that a misrepresentation claim was not a bona fide claim with a better than 50 per cent prospect of success.
“Watchstone denies any misrepresentation in the strongest terms and remains satisfied that neither the warranty claim nor a misrepresentation claim have merit and will defend such claims robustly if proceedings are brought.”
The £600m claim is the latest development in an ongoing process with Slater and Gordon, which announced in November last year that it intended to recover some of the £50m purchase price of Quindell, which was held in escrow during the acquisition.
In November last year, Stefan Borson, who became general counsel of the company when it was renamed Watchstone, told The Lawyer: “Given their intimate knowledge of the industry and deal experience, they were rigorous in their due diligence and we allowed them and their advisers the access to carry out a full process.
“We don’t believe there are grounds for a claim and will defend it robustly.”