Claims Direct is to buy rival personal injury firm Claimline in a deal worth £1.54m. The move is aimed at speeding up its return to profitability.
Claims Direct is to buy rival personal injury firm Claimline in a deal worth £1.54m.
The deal will involve the issue of up to 11m shares in Claims Direct. Half the consideration will be issued on completion of the deal with the rest being deferred for two years.
Claims Direct chief executive Ronnie Henderson said the acquisition would allow Claims Direct to break-even with fewer cases.
It will also give the company the ability to change its business model. It now plans to introduce several types of insurance policies ranging in price, according to each type of personal injury case.
Currently, it makes customers take out a £1,200 insurance policy to pursue litigation.
Like Claims Direct, Claimline is loss-making. It made a pretax loss for 2000 of £560,000 and has net liabilities of £152,000.
Claims Direct has warned that it is still on course to make a loss for the year but that it is getting closer to breaking even.
It said that it had made good progress in cutting costs since its interim results in November but added that the level of accepted cases remained low.
The company has also managed to reduce its bad debts by around £2.7m.
