Shares in estate agency Countrywide (CWD) jumped 7% to 365p first thing on Monday, valuing the firm at £123m, on confirmation that it is in discussions with rival agency LSL Property Services (LSL) ‘regarding a possible all-share combination.’
Reports had begun circulating at the weekend that the companies, two of the UK’s largest listed estate agencies, were in talks about a possible tie-up.
Countrywide gave no details of the talks except to say that discussions were ‘ongoing’ and that ‘there can be no certainty that any offer will ultimately be made’ for the firm. LSL shares traded slightly lower at 340p, valuing the business at £350m.
Were a deal to materialise it would create a powerful force in the UK market, bringing together Countrywide’s brands such as Bairstow Eves and Hamptons with LSL’s brands such as Your Move and Marsh & Parsons.
Together the two firms operate over 1,000 branches with more than 14,000 staff so there would likely be some ‘consolidation’ if they agree to merge.
Both stocks have suffered in the last year due to weak activity in the housing market, caused by political and economic uncertainty, and to growing competition from online rivals such as Purplebricks (PURP) and portals such as Rightmove (RMV) and OnTheMarket (OTMP:AIM).
The sharp recovery in the Countrywide share price late last year was the result of a 50 for one share consolidation, where shareholders exchanged 50 old shares for one new share, rather than a sudden surge of confidence in the business.
