Done Deal: Watchstone and Slater & Gordon Settle longstanding feud

November 11, 2019

2 min read

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What's going on here?

Insurance firm Watchstone and law firm Slater & Gordon have finally settled their long running feud on the brink of a nine-week High Court trail.

What does this mean?

The two-year dispute dates back to 2015 when Slater and Gordon attempted an acquisition of Watchstone (at the time known as Quindell) for £637m. Unfortunately, the acquisition was a disaster, with Slater & Gordon suing Watchstone for alleged breaches of warranty and fraud in June 2017. They claimed that Watchstone had misrepresented them after a potentially  “transformational” deal went awry. Watchstone responded with a counterclaim in September 2019, claiming that they had uncovered an “illicit back channel” as they claimed Slater & Gordon’s corporate finance advisor accessed confidential information about Watchstone from PwC. Their suit was for £63m.

The two parties have now decided to settle their claims against each other, with neither having to make an admission of liability. Of the ÂŁ50m held in escrow, the settlement provides ÂŁ11m to be distributed to Slater & Gordon with the remaining balance of ÂŁ39m being awarded to Watchstone. Both sides believe the other did not have a legitimate reason for their claims.

What's the big picture effect?

The settlement between Watchstone and Slater & Gordon is considered to be a wise move as it provides both companies with certainty. For Watchstone, a large amount of money was made accessible to them due to the unlocking of the escrow. The financial benefits of the settlement continue to be evident in the increased value of shares in Watchstone, which have increased by 33% in London. It also saves both sides from the unpredictable nature of a trial. Slater & Gordon have already spent ÂŁ31.7m on due diligence prior to the merger, and if they had been required to litigate further, the extra money spent would no doubt have been a significant blow to the firm.

Report written by Hanna Tesfazghi

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