Quindell’s shares opened five per cent down this morning but then rallied six per cent on yesterday’s close after the company announced it was buying the RAC’s stake in joint venture CCS.
Quindell said it will take full control of Connected Car Solutions, which makes “black boxes” for cars, in a restructure costing £18.5m, but offset by a £15m cash payment by the RAC.
The restructure is not expected to have a negative effect on the profits and the insurance outsourcing firm reaffirmed its subscriber targets and market guidance. It also expects to save on costs it will no longer spend on the rollout of the RAC black boxes.
The telematic devices similar to an aircraft black box was due to be rolled out to 2.5m of the RAC's members to encourage safer driving and reduce premiums.
The two firms started working together on the joint venture in April with £15m investment and the expectation of a further £70m in due course.
Quindell said at the beginning of August that it had not "fallen out" with the RAC over the deal when devices were not rolled out in July as expected.
Rob Terry, chairman of Quindell, said: "The relationship between RAC and Quindell remains strong and we will continue to work closely together in key areas, including in relation to the servicing of claims arising from RAC's connected car offering and potentially through the ingenie brand. These revised terms are in the best interests of both companies.”
Update: this article was amended to clarify the telematic device was meant to rollout to 2.5m of the RAC's 8.2m members.