Following its decision to undertake the $1.2 billion acquisition of UK-based Quindell Plc's Professional Services Division (PSD) shareholders of Australia's largest law firm, Slater & Gordon Limited (ASX: SGH), appear half-hearted about the deal.
Slater & Gordon said it would fund the biggest acquisition it has ever taken through a combination of debt and institutional and retail equity.
The institutional component was undertaken earlier in the month. However the 2-for-3 retail offer wasn't as successful as perhaps the company would've liked.
Indeed, in a statement to the ASX yesterday, Slater & Gordon said, "The Retail Entitlement Offer received acceptances for approximately 41.3% of the total entitlements available."
In a subsequent release this morning, the firm said it sold 26.7 million of the total 45.5 million shares on offer to new investors and existing shareholders during the company's retail shortfall bookbuild.
A shortfall bookbuild is an auction where institutions and other investors bid for the leftovers of a placement. At the shortfall, shares sold for $6.38.
Meaning, since shares under the original 2:3 retail offer were priced at $6.37, retail shareholders who didn't take up their entitlements, as well as those ineligible to participate, will receive one cent for each new share not taken up under the offer, less any withholding taxes.
Should you buy Slater & Gordon shares?
It's usual for some shareholders not to take up their entitlements (some may have already been heavily exposed to the stock, didn't have the cash etc.) but, personally, I'd be hoping for more than 41% participation in a retail offer if I ran a company.
I've held reservations over this deal since it was announced on 30 March 2015. Whilst I remain cautiously optimistic on the outlook for the acquisition and the firm as a whole, I'm holding off buying any more shares in Slater & Gordon, for now.
