Acquisition extends Wolters Kluwer’s position in Corporate Legal Services.
Wolters Kluwer announced today that its Corporate Legal Services (CLS) group has signed an agreement to acquire the remaining 62% of Third Coast Holdings, Inc. it does not already own for $180 million in cash, subject to closing adjustments, bringing its total cash investment since 2002 to $197 million. This acquisition supports Wolters Kluwer’s strategy of focusing its capital on its high growth businesses. Completion of the transaction is subject to Hart-Scott-Rodino regulatory review and other customary closing conditions.
Third Coast Holdings and its operating companies provide enterprise legal management software and services for general counsel and law firms in the U.S. and internationally. Wolters Kluwer has had a minority interest in Third Coast Holdings, Inc. or its predecessor since 2002 and has accounted for its minority share of net profit or loss within equity-accounted associates.
Third Coast Holdings and its subsidiaries have seen strong growth in the past several years and reached estimated revenues of over $57 million in 2013. Over 80% of revenue is subscription based. Following completion, and including integration benefits, the business is expected to deliver a return on total investment above Wolters Kluwer’s after tax cost of capital (8%) within 3 to 5 years. The transaction is expected to be slightly earnings enhancing in the first full year following completion. Wolters Kluwer is expected to record a non-cash book profit of approximately $100 million on its minority investment at the time of closing, subject to accounting adjustments.
The acquisition and subsequent integration of the business as a part of Wolters Kluwer Corporate Legal Services will enhance CLS’ capabilities to offer enterprise legal management solutions, open additional avenues for international expansion, and create operational efficiency opportunities.
Nancy McKinstry, CEO and Chairman of the Executive Board of Wolters Kluwer, commented “This agreement underscores our strategy to extend our Corporate Legal Services business, one of our high growth positions in the portfolio.”
“This is an exciting opportunity for our company and our customers. Following completion of this acquisition, we will be able to provide a broader range of truly best-in-class solutions to serve enterprise legal management customers with different preferences and needs, across multiple segments,” said Richard Flynn, Group President and CEO of Wolters Kluwer Corporate Legal Services.