14th Jan 2022 10:58
(Correcting the disposal is for a nominal sum, while GBP15.5 million was the original purchase price.)
(Alliance News) - Foxtons Group PLC on Friday unveiled plans to sell the sales business of estate agent Douglas & Gordon Ltd for a nominal amount.
Under the deal, the London-based estate agent will sell Douglas & Gordon's sales business and all of its branches, while integrating the D&G lettings business into the Foxtons network. The sales business is being sold to its current chief executive officer, James Evans, with GBP3.7 million to be left in the business to cover working capital requirements and retained liabilities.
In March 2021, Foxtons acquired D&G and its lettings business, which comprised the majority of the company's revenue, and a loss making sales business. Foxtons paid GBP15.5 million at the time, with the acquisition coming with GBP3.9 million in cash. "This was an attractive valuation which ascribed no value to the D&G sales business," it said.
Wanting to dispose of any loss making businesses was a major driver in offloading the sales business, Foxtons explained. The integration of D&G's lettings business was driven by both companies having an established branch network which "overlaps significantly".
"D&G has performed extremely well over the last ten months under Foxtons ownership and this next step is a real win-win for both parties to the transaction," commented Chief Executive Nic Budden.
"We have an excellent track record of acquiring and integrating lettings businesses and expect to deliver significant growth in operating profit through the integration of the D&G lettings business into Foxtons highly scalable infrastructure," he added.
D&G lettings is expected to deliver an operating profit of around GBP4 million in 2022, Foxtons stated. This is an increase of over GBP2 million on the operating profit contributed by the whole D&G business in 2021.
Shares in Foxtons were down 0.4% in London on Friday morning at 41.39 pence each.
By Will Paige; [email protected]
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