Countrywide and LSL Property Services, two of the United Kingdom’s most prominent real estate agents whose shared number of landlord clients are in the tens of thousands, have confirmed that discussions for a merger is in progress, confirming suspicions that Countrywide is not in the best circumstance and is being given some help.
Countrywide, whose brands include Taylors and RA Bennet says:
“The Board of Countrywide plc notes the recent press speculation regarding Countrywide plc … Countrywide confirms that it is in discussions with LSL Property Services plc regarding a possible all-share combination. Discussions between Countrywide and LSL are ongoing. At this stage, there can be no certainty that any offer will ultimately be made for Countrywide. A further announcement will be made when appropriate.”
LSL Property Services, owner of brands such as Your Move and Marsh & Parsons, told its shareholders that:
"In view of the recent press speculation regarding Countrywide plc and the announcement by Countrywide, the board of LSL Property Services plc confirms that it is in discussions with Countrywide regarding a possible all-share combination. Discussions between Countrywide and LSL are ongoing. At this stage, there can be no certainty that any offer will ultimately be made for Countrywide. LSL reserves the right to introduce other forms of consideration and/or vary the mix or composition of consideration of any offer. Further announcements will be made in due course as appropriate."
Although the merger is yet uncertain, the union will result in the biggest real estate agency group creating a 14,000-strong workforce. But with only more than a thousand branches shared between the two companies spread across the country, some employees may not be able to keep their jobs. It remains to be seen though.
And despite Countrywide being the larger company with 10,000 employees, it would be the junior partner because it’s company has a lower value. Having gone through leadership setbacks, a closure programme, an emergency rights issue, a shareholder rebellion, two compliance breaches worth a total of £315,000, and just recently, the stalled sale of its commercial property business, Lambert Smith Hampton for £38 million - a deal described as very important to the company’s financial situation. Countrywide’s value as of Friday’s trading close was just at £110m. LSL on the other hand was valued at £355m on Friday. The merger would bring the two companies’ total assets to almost £470 million.
But such market dominance raises an alarm for competition regulators, because there is a perceived limitation of choice in representation, so, deals done by the companies, if and when they merge, will be closely watched and reviewed by the Competition and Markets Authority (CMA).