Foxtons shares rose over 5% on Thursday after shareholders voted overwhelmingly in favour of disposing of the loss-making Douglas & Gordon sales agency.

Foxtons last month announced the simultaneous disposal of the D&G sales business and all of its branches, by way of the sale of Douglas & Gordon Limited, and the integration of the D&G lettings business into the Foxtons network.

The decision to offload the D&G sales business and all of its branches, with the deal expected to complete today, received 99.98% approval from investors at the General Meeting held yesterday, including from all the top 10 shareholders.

Less than 12 months after buying D&G, the London agency says it sees the acquisition of lettings books and businesses as a key part of the Foxtons strategy and the Group has, in the last two years, successfully acquired and integrated a number of these businesses.

Foxtons acquired D&G in March last year, a high-profile London estate agent with a large lettings business, which comprised the majority of the company’s revenues, and a loss-making sales business. It was purchased for total consideration of £15.5m, with a cash balance of £3.9m left in the business which was in excess of its working capital requirements and known liabilities. This was a valuation that ascribed no value to the D&G sales business.

Foxtons says the D&G lettings business has performed well in 2021, with the letting portfolio growing by 4% to around 3,000 live tenancies and generating £10m of lettings revenue in the ten months of Foxtons ownership. Although the D&G sales business has also grown since acquisition, having benefited from, among other things, improved market conditions, it contributed an operating loss of approximately £1.9m to the Group in 2021, from £6.8m of sales revenue.

A senior source at Foxtons was keen to point out yesterday that the deal was “approved overwhelmingly” by shareholders, contrary to suggestions made by Russell Quirk, in an interview with Christpher Watkin, shown on EYE yesterday, “implying shareholders were not happy about the disposal”.

Quirk, co-founder of ProperPR, suggested that investors “didn’t agree” with the decision to offload loss-making D&G, and “if there was a significant benefit” in offloading the sales division of the company, Foxtons’ share price would rise sharply.

He was referring to the fact that there was no competitor tender process for disposing of D&G, with a view to seeing if another company was prepared pay more than £3.8m to take the business of Foxtons’ hands. You can watch the interview below. 

Foxtons’ share price ended the day 39p, up 5.3%.

Commenting on Foxtons’ share price hike yesterday, Quirk said: “That’s fantastic news for them and a rare positive in their recent slide from £3.98 to 39 pence that they now sit at. So, just another £3.59 to go [until share price reaches its previous all-time high]!”