Some of the UK’s biggest estate agencies could find themselves the target of mergers and acquisitions, after significant falls in their share prices.
That’s according to industry analysts, who have suggested that the likes of Foxtons and Countrywide were among some of the most obvious subjects of mergers and acquisitions (M&A) activity.
Neil Wilson, an analyst at ETX Capital, said there was a “clear rationale” for mergers, according to a report by Bloomberg.
He said: “A merger of equals or takeover are definitely options that would make sense, given what the market conditions and share prices are.
“The more traditional letting agents must be looking for a way to cut costs in this environment.”
Meanwhile, Christopher Millington, an analyst at Numis Securities, appeared to suggest that private equity houses could be interested in taking some of the bigger listed businesses private.
He said: “From a private-equity point of view, Countrywide and Foxtons tick a lot of boxes.
“The shares have underperformed, but they should be able to generate decent cash going forward.
“In the case of Foxtons, this will depend on how long the London market takes to turn around, and in the case of Countrywide, it will be about how they restructure management to improve the operational performance.”
At the close of trading yesterday, Countrywide’s share price stood at 81.7p, up 4.2% for the day, but having sunk by around a third since the start of the year.
All eyes will be on Countrywide’s full-year results for 2017, expected on March 8.
But the estate agency’s own in-house broker Jefferies has suggested that Countrywide’s earnings before interest, taxation, depreciation and amortisation (EBITDA) could drop to as little as £50m — far less than the £64.8m EBITDA estimate that it made in January this year.
Nonetheless, a broker’s note issued by Jefferies analysts Anthony Codling and Sam Cullen warned that the shares have lost so much in value that there is a risk of “throwing the baby out with the bathwater”.
Explaining their thinking, the brokers said: “We estimate that Countrywide currently generates around £15m of EBITDA from tenant fees and the UK Government has said that the tenant fee ban will not come into force until after spring 19.
“Making the assumption that FY2017 will represent the low point of EBITDA for the group, if we subtract £15m from our £65m estimate we arrive at £50m as a floor for EBITDA.”
Jefferies rated the group’s shares “hold” and set a price target of 125p.
Foxtons, meanwhile, closed at 77.5p, up nearly 5% for the day, but down from around 80p at the start of this year.
Both Countrywide and Foxtons declined to comment on claims that they could be subject to mergers and acquisitions.
Comments (29)
‘ 2 other independents in my patch, know the owners for ever, have a pint with one of them from time to time’
You have a pint with one of them from time to time?! Jonnie, I guarantee that within the next few hours one of those two ‘socially awkward oddballs’ will be on here accusing you of running a cartel.
COMMENT OF THE WEEK!!
Right,
Had a think about all this share price business and I’m definitely sure it’s so low on my list of things to concern myself with its down there with my concern for the levels of weirdness some posters go to on here to show their love and adoration for a business that it all about the share price, even if this weirdness would no doubt embarrass the Brothers it’s aimed at, think Alan Partridge’s biggest fan which I’m sure can be found on You Tube……….I’m not the only one that pictures both of them as a pair of socially awkward odd balls who’s wives (if some unfortunate pair of women have married them) really don’t like them at all am I?
Im also indifferent about Countrywide, the local one to me being the only one I think about has had more staff changes than I could ever manage to put a number on, tiny impact locally and right down my list.
Anyway, point is things in business that are high on my list outside my staff and all the own your own business things are 2 other independents in my patch, know the owners for ever, have a pint with one of them from time to time and my lad plays cricket in the same club as the other chap but my god they are good, I know they have the same view on me and my lot here, so, plc listed companies make some posters positively moist on here but for the majority of us it’s the decent owner operator independent firms that are the ones we watch?
Jonnie
Jonnie,
Good post.
I hold my hand up to being somewhat socially awkward but Dom looks more of an outgoing type than me from his picture 🙂
Of course the only reason I even started to post on here was because of the obsession with PurpleBricks and the bias and misleading posts from some of the regular posters. I don’t suppose you’ve noticed any of that?
For ‘obsession’ read ‘frustration’ becoming anger I suspect because PB looks to bend the rules and use investment money to behave in an anti competitive way using its huge resources to mislead those that are the customers; maybe??
This frustration has been experienced by the customers who are of sufficient number to have ‘watchdog’ and Radio 4 get stuck in to taking a long hard look at PB and it’s practices. Smoke without fire could it be?? I really don’t think so and neither do a lot of those who post on here and feel that they are in a contest with a large organisation that refuses to play fair, will only do so when the OFT and ASA tell them that have to and steadfastly refuse to answer the question of ‘how many do you actually sell?’
is that bias or exasperation ‘me old duck’ as we say araynd ere!
ducky
“Of course the only reason I even started to post on here…”
The only reason. “Of course” it was
Yeah, right to both of those lame duckys.
“…was because of the obsession with PurpleBricks…”
Good for you – admission and acceptance of your problem is always the hardest part of the loooooooooooong road to recovery.
“…and the bias…”
You mean like “My duckling’s got more feathers than yours”? “Mine waddles better”? “My ickle down-ball has a louder quack”?
We know you wuv your widdle pet, ducky. Nothing could be more evident. The lengths you go to pwotect the widdle tweetie are admirable. Or borderline obsessive – not sure of the line in the sand on that one.
But trust me – that’s one motherf*****ng ugly duckling you’re permanently man-moist over.
“…and misleading posts from some of the regular posters.”
Let’s clarify something, shall we?
By “misleading”, you actually mean ‘posts that lead people where you and your pet duckling don’t want them to go or see’.
Now ain’t that a ducking shame.
AgentV,
>The articles are always going to be slanted towards what Agents are interested in
I asked this question of Robert May earlier and got no reply.
Why are Agents interested in PurpleBricks’ share price dropping but not in it rising?
Do you really have to ask ducky?
Yes, I’d like to know what AgentV thinks. But your opinion would also be interesting.
I would add that Robert May posted on twitter suggesting that only share drops are covered because it creates more posts on PIE.
“The reason it gets so much coverage on Eye is to get the angry fanboys driving up the posts.
You get all dummies and prams and spend your days yattering up the post count”
I’m not so sure that’s the case though because all articles on PB generate a lot of discussion.
I dont think the share price rising or dropping bears any resemblance to whether it is a good business model or not for the general home moving public. It appears to be a better business model for stock brokers / investors who win or lose on the ups and the downs. The interest in the share price moving in a downward fashion will be a nod back to reality; which is that fear and loathing do have an impact in a downwardly mobile fashion. It then just becomes a constant tug of war between reality and hype before facts catch up with you. Its then only a matter of time before you have hypothetically speaking, drilled as many holes in a region as you can without finding oil, or finding someone who will foot the bill to extract the oil if you do find it, that you end up on a constant even plane of pointlessness headed for obscurity; with everyone sat around twiddling their thumbs in the hope of just being able to reach the giddy heights of breaking even on a bad investment.
Why are Agents interested in PurpleBricks’ share price dropping but not in it rising?
I am not really interested in the share price at all, if I am honest. If I was I would be stalking the investor website you post on.
I sometimes have a long forlorn hope that a significant fall in the share price signifies a loss of demand by investors and a tiny miniscule chance that the markets might force the company to actually declare what its completed sales (and I mean completed by them) to listings ratio actually is!!!….and before you ask cyberduck mine is over 90%, those that we didn’t complete sales on were in the main where people changed their minds about selling but apart from one (who wanted to pay upfront and for whom we will sell for no extra charge when they sell again) they all walked away without having to pay a fee.
Why do I want to know this piece of information…..because the majority of time consuming work I do on property sales happens after the sale, as it does with most Full Service agents. So therefore my average fee takes all the ‘after sale work’ into account. Agents that don’t have to do a lot of that work can obviously charge less per property….and if you only have to do it on half the properties you list, it is a very significant saving of time and resources compared to the model I have where it is always a part of the work I do, before I get paid.
Buts lets face it, the declaration is just never going to happen…..it is a forlorn hope, that will never be fulfilled…..so I don’t really care about the share price anymore……and I am not going to get into a circular argument with you anymore, because you will never take much notice of anything any agent says…and we will never change our views about a business that was built on the basis of ridiculing and undermiming good honest work carried out by many small family supporting businesses, throughout the country, in order to make vast amounts of money for a large corporate’s owners.
Just wait till after 7 years of training, your son’s future job opportunities (like consultancy posts), are severely affected by large corporations introducing robots to do operations (as they are now doing in orthopedics) and artificial intelligence computers using full sweep test results, heralded as ‘never getting diagnoses wrong’, just in order to make the companies and their owners more money……..then perhaps you will know how we feel sometimes!!!
BSOS23PC
ducky
“Why are Agents interested in PurpleBricks’ share price dropping but not in it rising?”
For the record (for what it’s worth with you – you seem to like labelling most of what I say as disingenuous) THIS Agent couldn’t give a fuppenny about PBs share price.
APART FROM, that is, thoughts for those that stand to lose having bought a potential lemon. For them – I will try to feel sorry for them – but they were the ones who took the risk… made the purchase… so I dare say I should simply think they had it coming.
MY “interest” is in my industry, and the public that it serves. But then I’ve already spelled that out on numerous occasions.
Why are you fixated with PBs shares, ducky – I seem to remember you stating a while ago that you didn’t (at that point in time) hold any. Has that changed?
You picked up a tranche when some Nervous Norman got the collywobbles and dumped their load?
You got no reply because by the time you started with your schmoozing, envy and opinions I’d done 4 hours and then took a day off. Same as I’m doing today
Property industry Eye is a news site and industry forum, it earns it’s money from advertising. The more people who visit the better chances they’ve got of convincing advertisers to part with money. Vexting people like you on one side and your vocal opposition into debate is how Eye earns its keep
The only people who believe the Purplebricks share price are those greedy sheep investors who fear missing out (credit Michael Bruce, Elite Business, December 2014) those who are blindly following Neil Woodford’s investments. In country speak Neil Woodford is the decoy, a plastic pigeon placed in a field designed to attract other pigeons to their fate.
The Purplebricks share price is a bubble, we’re all sat her waiting for it to burst. At some point one of those people who’ve invested too much following Woodford will realise he is leading them over a cliff and will bail out. We are all sat here waiting for that to happen, one morning 1% drop will turn to 3% will turn to £1 will turn to ?????. It gets covered because Eye and the industry expects it to happen. Eye is a camera focused on Mount St Helens, waiting for the side to blow out. The rise in share price doesn’t attract attention it is merely the natural attempts to keep the price at its artificial high.
Estate agency is a service industry, all the codswallop and theorising I’ve heard won’t change it. Purplebricks is a great system for selling property as a commodity but estate agents don’t sell property, they sell homes; 95 times out of 100 factors outside the price achieved have to be considered. That’s why Prudential, Black Horse, General Accident, Halifax, Woolwich blah blah corporate blah hasn’t broken independent agency in the 32 years of trying. The wads of cash thrown at breaking the small independent agent is well beyond calculation or estimation yet still arrogance and ignorance keeps trying.
You now have as much time to tell me why I’m wrong as you like…. begin now.
Dompritch134
While you are on the subject, that’s sarcasm by the way and in words you can understand; no that last bit is not sarcasm.
You order and pay for 50 bags of top coat plaster. After 3 weeks you get a call to say the order is delayed as they were mistaken. I know they told you they were the biggest online suppliers of plaster and they had more plaster in stock than the others, but in truth, they cant find the plaster. They are looking reasonably hard to find it, they know it is in the warehouse somewhere, it’s just a matter of time before someone trips over it. They eagerly tell you they have done their bit of looking for it by putting an advert with pictures up on all the message boards, on their website, in the canteen, on the back of the toilet door and are even flying a flag out the front asking people to come inside; take a look and help find that elusive plaster.
But don’t worry they said there is an 88% chance you will receive the top coat plaster within 10 months. Sorry, that should say 78% chance in 10 months and that they don’t take refunds so just wait for the plaster. They have your money and trust them, they are doing everything in their power to deal with more orders for plaster before resuming their search for your plaster.
Based on your undisputed figures the money plus the £300 you paid for delivery, you can whistle for and you appear happy with that arrangement.
And then if the report that it is closer to 50/50 chance is correct, that really is shocking. And if not correct then I look forward to the ASA informally resolving the case.
yeah Dompritch134
ya boo sucks
unless you don’t actually work for purplepeeps or similar,
in which case I withdraw my last comment !
“That’s according to industry analysts, who have suggested that the likes of Foxtons and Countrywide were among some of the most obvious subjects of mergers and acquisitions (M&A) activity.”
A Fox in the Country. Who would have thought !
Well Foxtons have no debt whilst CWD have a declining revenue ,unhappy troops and a £193m debt bill incurred unncessarily where much head scratching is taking place
CWD- In addition a board of directors who during 2016 embarked on spending millions of borrowed monies on a spree of buying back their own shares at over 330p in a series of transactions almost daily in March 2016 .Then in 2017 had to go for a placing to raise money at 175p a share and waited too long to remove Platt .You really couldn’t make it up
The future of CWD will be largely dependent on Oaktree and Brandes who hold large stakes Oaktree managed to offload a big chunk of shares at 600p back in 2013 so they are no fools despite promises not to . With the initial placing they are above water on their investment
For Brandes its a different matter they have been building up a stake all the way down where its currently showing them a heavy loss Certainly regime change is on the cards . Somebody needs to do something quick as there will be many parts of CWD more than capable of doing a better job of running themselves without having to answer to the flailing BODS .Why take on the burdensome debt when you can poach the staff?
I think many will be casting their eye over the relative minnow Belvoir
Do you have an opinion on Jefferies and their bias as well documented in analyst Mike Delprete Blog?
http://www.mikedp.com/articles/2017/8/21/transparency-and-bias-in-the-face-of-disruption
Interesting article dom. Doesn’t smell right does it!?
There’s a lot more where this came from.
You should check it out on line, but make sure you’re sitting down
Any odds on how Jefferies latest share hold recommendation will work out this time?
Track record very poor due to ???????
Mr Codlin of Jeffries has demonstrated an unerring support of CWD’s incompetent management when it was obvious that it would not work and worse, was structurally damaging the business. However, he clearly bought into Ali Pali’s vision of the ‘its retail innit?. If he had asked around he would have known that since the arrival of Ms Tyrer and the very initial stages of her flawed vision, that the experiment wasn’t going to work.
So; Mr Codlin got that one wrong. The question now is, was that bias or poor judgement?
Is Mr Codlin making negative noises about PB? If he is it may be that he has learned a lesson from what is his embarrassing position on CWD. PB, in my opinion, cannot sustain a share price such as at present based upon the numbers of property being sold, competitors in that space able to come in and undercut almost at will and most importantly the feeling that they misrepresent what they do. Most importantly, you cannot take a grand of ‘tax paid’ off of a punter give him only a 50% of a result and expect that it doesn’t give you a bit of a ‘bad rep’. The odds don’t stack up.
Share prices are up/down/all around and only when the results get published do you start to see value short/medium and long term. If my brokers suggested PB or CWD as they did a years or so back, my answer would be a resounding no, no, no!
It’s called “The Big Ben technique” to so called independent forecasts.
Multi faced !!
As the companies own broker, they certainly don’t have a great track record with CWD analysis and estimates. Now they’re suggesting a floor of £50M EBITDA when in January they were estimating £64.8M.
Oh, ducky…
This is nothing whatsoever to do with CWD, is it? You couldn’t give a fuppenny about that company. I doubt you’d even given them a single thought prior to looking up all you can about Mr Codling’s business so that you can try to drive a tiny wedge of distrust into his other “analysis and estimates”, as you put it.
You’re doing your usual and likening eggs to apples to deflect attention to the real issue you want to quack at.
Predicting the future of most things is generally a gamble. Possibilities… probabilities – some may even say certainties. But a punt is what it actually boils down to. That if ‘A’ and ‘B’ happen it will result in ‘C’… unless ‘D’, ‘E’, ‘F’ – and all the other variables – drop in and bu99er up the plan.
A toss of the coin, you might say…
Looking back and REVEALING THE TRUE PAST is a piece of cake once the facts are cast in stone.
Sorry to be the bearer of news that you’re tenaciously refusing to accept, but however many apples you’re currently sitting on, ducky – you ain’t gonna get a single duckling out of them… ugly or otherwise!
Only three certainties in life, ducky…
Death…
Tax…
and, last but by no means least –
Trustpilot 1-star reviews being #NUKED to maintain a 9.5 average!
Let’s just understand; Mike DelPrete is a ‘tech’ entrepreneur and he’s American. The point being he has little experience of the UK housing market, how things are done here, he’s not an agent or realtor and therefore cannot be considered as an expert, imo. When the American model has been attempted here such as Century 21 it failed spectacularly. So ; let’s take a look at opinions of those not here, never been here and never worked in the industry but, let’s not give too much credence to their ‘observations’ too hastily??
Note you are not disputing the established facts in the report. Plus a lot of your general rhetoric is also wrong.
Ever thought about becoming a Jeffries analyst?
It’s from last August, might as well be from last century. Still if it makes you feel better. Why not read those 15 year post-brexit forecasts while you’re at it?
So you don’t consider somebodies track record when you decide whether to take their advice?
Here’s Jefferies claiming a 14% conversion rate for PurpleBricks