The partnership between Quindell and the RAC has taken a new turn with the announcement that Quindell is to acquire the RAC’s stake in the two companies’ telematics joint venture, Connected Car Solutions (CCS). This comes just months after they signed a deal to distribute combined connected car products.
In a statement, Quindell said that its net cost of the restructuring is £3.5 million, which it will pay in cash over 18 months. The restructuring will have no negative effect on its profit expectations – the company claims – as this will now be delivered on lower turnover with an improved cash profile.
Quindell has come under pressure in recent months, with shares sliding following the appearance of a report published in April by Gotham City Research LLC named “Quindell PLC: A Country Club Built On Quicksand.” Last month, Quindell’s shares fell by as much as a double digit percentage on the day its half yearly report was published, despite posting an increase in pretax profit to GBP153.7 million from GBP39.2 million in the corresponding period a year earlier.
“Due to market conditions beyond the control of either Quindell or RAC, the parties have concluded that it is not the best use of capital for either party to finance a free telematics roll out to consumers as initially planned,” Quindell said in a statement.
Despite the acquisition of RAC’s stake in their joint venture, Quindell said the two companies have a “strong and significant ongoing relationship”.
Quindell said it will continue to execute on the companies’ existing five-year outsourcing contract and to supply technology to RAC. It also noted the intention for Quindell to process claims arising from RAC’s telematics for breakdown members. It also said the two companies are discussing the use of Quindell’s ingenie insurance proposition for RAC members.
Quindell said the revised terms of the RAC joint venture allow it to offer a “single connected car strategy across all global markets and brands including in primarily consumer brands: ingenie and Road Angel.”