Gordon Dadds has placed Ince & Co into administration as part of its $35m acquisition of the 150-year old shipping and insurance law firm.
London-listed Gordon Dadds insists the move has been completed for “technical reasons”.
It stresses there is no suggestion Ince is not a going concern and the takeover is to go ahead as planned.
Andrew Hoskins and Sean Bucknall of law firm Quantuma are reported to have been appointed administrators.
The takeover, first agreed in October this year, has been significantly restructured and it is understood Gordon Dadds has been advised not to take over Ince as a solvent business to guard against potential liabilities.
Such a move in the acquisition process is known as a pre-packed administration in which a buyer is lined up before an administration process begins.
It is understood the decision to put Ince into administration was taken because of uncertainty over income and balances owned from International offices to Ince, which presented a risk to investors.
In a statement to TradeWinds Gordon Dadds said: “Ince & Co could not agree the balances with their international offices – all Gordon Dadds wanted was certainty as to what those balances were.
“That situation definitely contributed to the advice they received from counsel in terms of protecting investors.”
The Gordon Dadds deal is the first time a London law firm has been taken over by a publicly quoted rival and is viewed as a considerable risk by investors because of the lack of material assets, TradeWinds is told.
The merged firm will operate as Ince Gordon Dadds (IGD).
Under the scaled down deal the price has been cut to £27.3m ($34.6m) a significant reduction on the price of £34.0m originally mooted, as TradeWinds reported last week.
The fee is payable in cash over four years as well as a grant of options in new shares.
The international offices of Ince International are not being acquired but have agreed to enter into new network arrangements and will continue to trade as Ince & Co.
However, Ince’s offices in Shanghai and Beijing will join IGD at the same time as the London operation.
The assets coming under Gordon Dadds control generated fees of £30.5m in the year ended 30 April 2018.
Total consideration is estimated at £27.3m payable in cash over four years and a grant of options over up to 3m new shares.
New borrowing facilities of £12.5m have been arranged.
