Countrywide has confirmed that it is in talks with LSL Property Services about a possible all-share combination.
“Discussions between Countrywide and LSL are ongoing,” a bourse filing said. “At this stage, there can be no certainty that any offer will ultimately be made for Countrywide.”
The statement said that a further announcement will be made when appropriate. LSL has until 23 March to make a firm offer.
Rumours began circulating in the press after Sky News reported that the real estate giant was in discussions with LSL Property Services about a possible merger. If it goes ahead, the deal would create the UK’s largest estate agent, with a value of around £470m.
The news follows a difficult time for Countrywide. Two years ago, its former CEO Alison Platt walked out after a dire profit warning. In March last year it reported deepening losses, with earnings tumbling 50%.
The troubled estate agent has blamed its troubles on uncertainties surrounding Brexit, however industry observers have been critical of its dated business model. Estate agents are coming under increasing pressure from online portals, and the rise of digitised transactions could further threaten business.
LSL is a smaller outfit than Countrywide, but is behind a diversified range of brands including Your Move, a jobsite for estate agents and LSL Land & New Homes, which provides services to housebuilders.
For the year 2019, LSL reported that revenues were down 16% on the back of branch closures. However, the group is anticipating a performance ahead of market expectations when it posts its financial results on 10 March.
“Whilst it is too early in the year to give a view on the 2020 market outlook, the combination of increased political stability and a favourable LSL estate agency sales pipeline on 1st January 2020 compared to the LSL Board’s prior expectations provide a positive backdrop to the start of 2020,” it said in a recent trading update.
