Quindell Buys RAC Stake In Black Box Venture
A London-listed insurance claims processor with ambitions to reshape the motor cover market will announce on Tuesday that it is acquiring the RAC's stake in their fledgling joint venture.
Sky News understands that Quindell, whose shares have slumped this year amid speculation about its prospects, will inform the stock market that it is to take full control of Connected Car Solutions (CCS).
The new business was intended to be a platform to instal more than two million black boxes in cars, putting CCS in the vanguard of the embryonic telematics sector.
Quindell and the RAC committed an initial £15m investment to CCS during the spring, with a plan for another £70m in future.
The RAC, which is working on a £2bn stock market listing of its own, was also given warrants to receive further Quindell shares if the AIM-quoted company's stock hit 50p or higher.
However, persistent speculation about Quindell's business model has exerted a toll on the City's confidence in the company.
Last month, its share price fell 12% in one day despite upbeat half-year results amid concerns about its accounting recognition of sales before payments are received.
Tuesday's deal is expected to trigger a £3.5m net cost to Quindell, with the gross cost of £18.5m offset by £15m in cash payments by the RAC.
The elimination of capital expenditure costs for rolling out the RAC black boxes will have a positive effect on Quindell's cashflow in the second half of this year and in 2015, it is expected to say.
The outsourcer is also likely to confirm that it anticipates meeting a previously stated target of 12 million paying subscriber connections by 2020.
In return, the RAC will buy back its brand license for telematics technology under the CCS joint venture, while some of the share warrants announced in April will be cancelled.
The two companies will maintain an existing five-year outsourcing contract, with further collaboration under discussion relating to Quindell's Ingenie consumer brand.
The RAC is close to announcing details of a stock market listing, and recently confirmed Sky News' report that Sir Mike Rake, the CBI president, is to become its new chairman.