Watchstone share price tumbles as ex-Quindell faces claim from Slater & Gordon

Shares in Watchstone Group (LON:WTG) have tumbled about 12 percent in London today as Australian law firm Slater & Gordon said that it was planning to sue the London-listed group following its £673-million acquisition of the UK group’s professional services arm last year. The news comes after the London-listed company, formerly known as Quindell, updated investors on its performance last week, reporting that its losses had narrowed in the first half of the year.

As of 13:33 BST, Watchstone’s share price had fallen 12.04 percent to 190.00p. The shares have lost more than 80 percent over the past year, and are down by some 37 percent in the year-to-date, with the group still struggling to recover from its turbulent past.
Slater & Gordon said in a statement today that it intended to bring claims against Watchstone arising from the Australian company’s purchase of Quindell professional services division. The law firm did not disclose the basis for the claims but noted that £50 million of the purchase price for Quindell, which is held in an escrow account, may not be released unless the claims are resolved.
Ian Ramsey, professor of law at Melbourne University, told the Financial Times that it was possible that the Australian group would argue they were misled by Quindell at the time of the acquisition. He, however, added that there was also an obligation on companies to engage in sound legal and commercial due diligence.
“It’s hard to predict where all of this will end up when and if it gets into the court,” he pointed out.
Watchstone meanwhile said that it did not believe there were grounds for the claim, adding that it “will defend it robustly”.