EYE NEWSFLASH: easyProperty likely to close after equity firm bids for parent company

An equity firm has launched a bid to take over the parent company of The Guild of Property Professionals, Fine & Country, and online business easyProperty.

The latter seems likely to close within weeks, as the online sector looks set to unravel further.

The offer for eProp, by Tosca Acquisition, comes amidst disagreements among the major shareholders and an admission that there are “no clear signs” of easyProperty ever turning a profit.

There are some 600 shareholders in eProp, which Tosca Acquisition is valuing at around £17.85m.

The shareholders will be offered some 50p per share.

easyProperty itself will be the subject of a strategic review.

The document says: “In particular, the degree of financial investment and management attention required by the eProp Group to compete with the market leaders in online estate agency have proven uneconomic at a time when the market share of the online model as a whole has stalled and there remain no clear signs of it becoming profitable.

“The eProp Directors are conscious that many of the larger online platforms are in financial distress or have fallen away, and sentiment about the hybrids is declining.

“It is against this backdrop that the eProp Directors have explored a range of strategic options for easyProperty, the eProp Group’s online division, which may entail significant related headcount reductions, regardless of the outcome of the offer.

“The independent eProp directors understand that many eProp shareholders and employees will share their disappointment that the eProp Group’s online division, similar to many of its peers, has not performed in line with expectations.”

Toscafund also underlines that while there has been disagreement among the current owners of eProp, it backs the management.

eProp CEO Jon Cooke and chief operating officer Marcus Whewell are not selling their shares. It is understood that the biggest shareholder after Toscafund is Malcolm Lindley.

Tosca’s offer document says that the eProp Group expects to report its financial results for last year by the end of this month.

Revenues of £10.82m and an operating loss of £0.87m are expected.

Toscafund has invested in eProp since December 2015 and says it has developed a “productive relationship with its management team”.

But, intriguingly, it says that there is “disagreement between the significant shareholders of eProp concerning the optimal strategy for the company, to the detriment of eProp shareholders as a whole”.

Tosca’s offer to buy the whole company comes after it acquired 1,941,275 shares in eProp from director Robert Ellice.

It was Ellice who originally acquired the ‘easy’ licence to launch the easyProperty brand in the UK. He laid on a ‘funeral parade’ through London, marking the supposed death of high street agents. This publicity stunt was held before any involvement between easyProperty with Fine & Country and the Guild.

Because the acquisition of his shares by Toscafund takes its stake to above 30%, it must by law offer for the entire business.

This morning, eProp CEO Jon Cooke told EYE: eProp Services plc largest shareholder, Toscafund Asset Management, has confirmed their formal offer to acquire the remaining share equity in the eProp business, allowing other shareholders the option of selling their shares.

“As part of this process, Tosca have confirmed their support of the current eProp Services’ plc management team, and that there is no intention to make changes to the management structure or the direction of travel for The Guild and Fine & Country.

“The announcement also confirms support of a review of easyProperty.

“Since easyProperty’s relaunch as a licensing business to independent estate agents in 2017, the market conditions have significantly changed, in particular the outlook for the hybrid/online sector.

“In 2017, it was widely predicted the online sector would reach at least 20%-30% by 2019/20. However, it is currently contracting with all the major players suffering commercial and financial challenges.

“The original rationale around the easyProperty licensing business was to give its GPEA customer base a vehicle to access the hybrid/online opportunity, using a brand and digital platform.

“Many of our members and licensees embraced this, and together we have thoroughly tested the online model.

“However, we have now reached the conclusion that it is not viable in its current form, given the market dynamics. This has prompted an immediate strategic review of easyProperty which will be completed by end of June.

“This review could lead to either us working with a joint venture partner, a sale of easyProperty or a potential closure. At this stage we haven’t finalised any of these options as ongoing negotiations are taking place.”

Toscafund continues to back other online estate agents. Only last month, it acquired over 3m shares in Purplebricks, giving it a stake of over 5.6%, while it also backs HouseSimple.

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11 Comments

  1. Ostrich17

    This morning, eProp CEO Jon Cooke said:
    “In 2017, it was widely predicted the online sector would reach at least 20%-30% by 2019/20″

    I don’t think anyone was predicting ridiculous market share numbers like that 2 years ago – perhaps PIE could ask Mr Cooke for his sources?

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  2. SeasideAgent9

    EasyProperty has not worked because

    A) the GPEA expected their already paying partner agents to cough up more money each month to have the “exclusive” licence for their postcodes, thus enabling those agents to take business away from not only competitors but themselves at good fees and in return, get the same business for next to sod all for listing something… oh and having the audacity to also take a large chunk of the said, cheap fee as well…

    and

    2) because it was ****! (just my personal opinion you understand)

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  3. smile please

    YOPA Next!

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    1. Property Pundit

      Or Housesimple?

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  4. haveathink

    The naivety of those involved speaks volumes – to think they began with a funeral parade of traditional agents – that classless stunt set the tone for a train wreck of a company.   Imagine if the Guild invested their money/ resources in improving full service agency than prop up this lot.

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    1. Robert May

      I will be corrected if I’m wrong but I don’t think you can blame Jon Cooke or Marcus for the funeral parade.  There was a  shouty bloke on here at the time telling us all what’s what, trolling and being vocal, but that is what challengers have to do, they have to be LOUD! They have to be heard and the funeral stunt was them getting themselves heard.

       

      The trouble they had was and will continue to be for anyone challenging traditional agency is one of who exactly  do you shout at and when, where do you shout and is what you’e shouting the right message?

       

      65,000,000 people  20,000,000 homes, 900,000 completions, 700,000 2nd hand re-sales about 1.2 m listings a year, roughly 100,000 instructions a month in 3500 activity centres.

      In January the number of listings is lower than early February, late February  instructions pick up March, April and May are good  for listings then its up and down before going quiet in mid November and December.

      A #local agent knows their local market they know what’s going on in their  tiny (1/3500th) corner of the market, they are on hand for the  1 a day instruction opportunity that  they and 5 other traditional agent will fight over.

      Until a disruptor has 3500 top of their game agents, one in every activity centre they cannot  hope to win enough volume business at the fees they charge to cover the cost of acquiring the instructions.

      The only organisations who have the reach to the  target audience are the portals but they don’t list or  generate income from selling property.

      At this point I shut up, once you’ve thought all this through in detail that thinking becomes very strategic and therefore very valuable (to agents)

       

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