Talks between the country’s two largest listed estate agencies could result in LSL offering for Countrywide. The offers seems most likely to be a shares deal but LSL has not ruled out “other forms of consideration”.
Announcements made by the pair to the London stock exchange this morning follows a speculative story yesterday that the two are planning a £500m merger. This morning, it was confirmed that talks between the two are ongoing but the statements suggest not so much a merger but a take-over by LSL.
The Sky News channel yesterday said that the merger “would underline the pressure on an industry being buffeted by competition from online rivals”.
It said that Countrywide and LSL, whose brands include Your Move, Reeds Rains and Marsh & Parsons, are discussing an all-share deal.
According to Sky News, the discussions were said at the weekend to be “serious although it was unclear how close the two sides are to announcing a transaction”.
The story says that a merger “would inevitably raise the prospect of substantial job cuts from the combined workforce of about 14,000 people”.
A spokesperson for LSL yesterday evening declined to comment. Countrywide did not respond when EYE enquired.
LSL shares have been trading at a three-year high, closing at 341p on Friday after hitting 345p last Wednesday. It has a market capitalisation of £355m.
Countrywide shares also made some gains last week, closing at 340p on Friday, up from 297p at the start of last week. Its market worth is far lower than LSL’s, at £110m.
Both companies have made significant cuts in branches and staff – Countrywide over the last few years and LSL, at its Your Move and Reeds Rains networks, in the last 12 months.
Countrywide confirmed the talks rumours to the London stock exchange this morning.
Its statement said: “The Board of Countrywide plc (the “Board”) notes the recent press speculation regarding Countrywide plc (“Countrywide”). As required under the Code, Countrywide confirms that it is in discussions with LSL Property Services plc (“LSL”) 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.”
The statement by LSL is similar but adds: “LSL reserves the right to introduce other forms of consideration and/or vary the mix or composition of consideration of any offer.”
The same statement was added to a new RNS by Countrywide this morning.