LSL has until 5pm on March 23 to decide whether to make a firm offer for Countrywide.

While early reports suggested a merger based on shares, it yesterday became clearer that LSL is interested in a takeover and has not ruled out “other forms of consideration” as well as shares.

Although LSL is the smaller of the two, it has a market value of £360m, compared with Countrywide’s £110m. If the deal goes ahead, LSL would be taking on a debt burden that is around twice its own.

Analysts at Peel Hunt said: “On the face of it this would help resolve Countrywide’s debt problem, or at least share it with the LSL shareholders (where debt is very modest).

“It would also allow the group to rationalise a series of costs by streamlining brands, estate agent offices and other services such as conveyancing [and] mortgage advice.”

Together, Countrywide and LSL have some 1,200 branches and, it is thought, around 14,000 employees.

Countrywide, which is into a three-year ‘back to basics’ turnaround plan, is the larger of the two with “over 850 branches” according to its website and an estimated 9,500 staff.

It has been struggling with huge debts and last March reported losses of £218.2m for the year 2018. It has acknowledged the need to offload its commercial property arm Lambert Smith Hampton to allow it to “materially” pay down its debts and concentrate on its core residential business.

However, its attempt to sell LSH to Monaco-based investor John Bengt Moeller has been decidedly problematic – the £38m sale should have gone through at the end of last year, but the buyer has yet to stump up the money. In its last half year results, to the end of last June, Countrywide said it had debts of £90m, likely to have risen since.

LSL confirmed last night that it has 360 branches (230 network and 130 franchised) but could not confirm total staff numbers.

LSL also has debt on its balance sheet, although it has always appeared happy to have debt as a strategy. At the end of last year it declared net banking debt of £41.9m, up from £32.1m the year before. It said that its board was “comfortable” with the level of gearing.

Both Countrywide and LSL have recently shut branches and shed jobs, and it is thought would not hesitate to do so again should the deal go ahead and result in duplications.

Yesterday, new forms were posted by stakeholders on the London stock exchange under the takeover code, requiring them to disclose their holdings.

Meanwhile, media coverage of the potential takeover could have estate agents scratching their heads.

For example City A.M. said that Countrywide’s “share price has suffered during a turbulent 2019 for UK house prices and the dominance of online competitors like Zoopla, Rightmove and Purplebricks”.

Yesterday, shares in Countrywide and LSL both closed almost unchanged at about 340p.