Now that the dust has started to settle over the sale of its Professional Services Division, Quindell (LSE: QPP) is getting itself back to business as usual. In Quindell’s case, that business has traditionally been acquisition.
And on Wednesday, the company announced that it has agreed to acquire the remaining 50.1% of PT Healthcare Solutions that it does not already own. But in a move that could set Quindell-watchers’ hearts aflutter, the deal is going to be yet another all-share one — the takeover of the Canadian provider of physiotherapy and rehabilitation services will be paid for by the issuing of 9.5 million new Quindell shares.
Past dealings
Quindell is currently under investigation by the Serious Fraud Office, partly because of past mysterious all-share acquisitions of companies whose value is tricky to identify, followed by the sale of those shares and the subsequent remittance of the cash back to Quindell in payment for services that have also proven hard to fathom.
Still, under intense scrutiny by investigators, we can be pretty confident that this is a genuine acquisition of a genuine company, with some value attached to the new shares rather than the worthless confetti the company was printing in the past. Whether it proves to be a good move for Quindell shareholders remains to be seen, although I am a bit surprised it has happened before the question of the £1-per-share cash return to shareholders has been settled.
Unhelpful
Getting back to those mist-shrouded past acquisitions, and the attempt to unravel them despite “deficiencies” in the records identified by auditors KPMG, new Quindell chairman Richard Rose was surprisingly candid at the firm’s AGM a week ago. Asked why Rob Terry had not stayed on to help with the investigation, Mr Rose told us that the ousted chairman had been “unhelpful”, adding that “I would suspect that the credibility would have been shot to pieces” had his services been retained.
Mr Rose went on to suggest that “I think that the majority of shareholders would form the view that he was paid too generously and retained for too long, but that’s a matter of opinion“, and we heard that shareholders had actually tried to force Mr Terry out before his controversial share sales (which he made in the undisclosed knowledge that house broker Canaccord Genuity had resigned) finally forced the issue.
What next?
So where does this all leave us now? Richard Rose sounds like a serious and no-nonsense chairman, and exactly the right kind of person that shareholders need. But right now, I don’t see any clarity in the direction of Quindell’s future business, or any idea what that business might be worth in terms of profit (both how much and when).
And we still don’t know whether that cash payment will be approved by the courts, or how the company might suffer from the fallout of the SFO investigation — though getting a fair idea of what some of its findings might be shouldn’t be too taxing.
I wouldn’t touch it
No, while Quindell (which will be changing its name before the end of the year, apparently) might have turned the corner and might genuinely have a viable future, it’s still in bargepole territory for me.