Estate agents Countrywide and LSL are in merger talks to create “the UK’s biggest property group”, reports Sarah Provan in the Financial Times. If the all-share deal goes ahead it would bring together LSL brands such as Your Move and Marsh & Parsons with Countrywide’s Hamptons International and Gascoigne-Pees to create a group worth about £500m with 14,000 employees.
The hope is that the tie-up will allow both firms to eliminate costs by having one head office and combining IT systems, says Julia Kollewe in The Guardian. There are also likely to be “scores of branch closures and job losses”, since both firms are struggling. Countrywide is doing particularly badly and has seen its market capitalisation fall from £750m when it floated in 2013 to around £111m today as it has “struggled with mounting losses and a heavy debt burden”. Indeed, Countrywide’s founder Harry Hill recently said that the business is “beyond salvation”.
It is “little wonder”, then, that Countrywide and LSL are “seeking strength in numbers”, says Vinjeru Mkandawire in The Daily Telegraph. After all, “cooling sales, sharp cuts to letting fees”, changes to stamp duty and the uncertainty related to Brexit is creating a “turbulent time” for the sector.
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Worst of all, new technology such as artificial intelligence has given the “commercial edge” to online-only brands such as Purplebricks, Zoopla and Rightmove. Nonetheless, online agents still only account for a “small slice” of the sector, so traditional agencies are likely to “remain relevant” for some time.
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