Acquisition of Douglas & Gordon

RNS Number : 8355Q

Foxtons Group PLC

02 March 2021

 

This announcement contains inside information

FOXTONS GROUP PLC (the "Company" or "Foxtons")

ACQUISITION OF DOUGLAS & GORDON

Tuesday 2 March 2021

Foxtons Group plc (LSE: FOXT), London's leading estate agency, is pleased to announce the acquisition of the entire issued share capital of Douglas & Gordon Estate Agents Limited ("D&G") and its subsidiary companies for £14.25m, on a cash and debt free basis (the "Acquisition"). The business is being bought from Members and Family Trusts of the Talbot Willcox family and a group of former employee shareholders.

Strategic rationale

The Acquisition is in line with Foxtons stated strategy of acquiring high quality businesses with strong lettings books and follows the recent acquisitions of three lettings books during the course of 2020. 

Having been established in 1958, Douglas & Gordon is a high quality London estate agent with a well-respected brand and large lettings business delivering around 65% of total revenues from 2,900 tenancies. The Directors believe that D&G will fit well with Foxtons' existing business model due to its high level of customer service and compliance, strong fee integrity, well-established landlord relationships and similar customer-focused and results-based culture.

The D&G business will continue to be run as a separate brand and with the existing management team remaining in place.

Terms of the transaction and financial impact

The cash consideration for D&G is £14.25m, on a cash and debt free basis, with normalised working capital remaining in the business. £0.5m of the total consideration is deferred for a period of 12 months. The cash consideration is being funded by Foxtons' existing cash resources.

The Directors believe that the Acquisition will be materially earnings enhancing from 2022 and will deliver an attractive return on invested capital.

The Acquisition constitutes a Class 2 transaction pursuant to the UK Listing Rules. For the purposes of the LR 10.4.1 R (Notification of class 2 transactions), D&G's revenue and EBITDA (pre-IFRS 16) for the year to March 2020 was £16.5m and £0.6m respectively. Gross assets at the end of March 2020 were £6.1m.

Full Year 2020 results

As previously announced, Foxtons will report its preliminary results for the year ended 31 December 2020 on Wednesday 10 March 2021.

Foxtons CEO Nic Budden commented:

"Douglas & Gordon is a business we have long admired and respected. Like us, it is a business with intimate knowledge of the London market and a culture built around delivering results for customers making it an excellent strategic fit. Today's announcement follows the acquisitions of London Stone, Pillars Estates and Aston Rowe in 2020 and demonstrates our commitment to use the Group's cash resources to acquire well run businesses that advance our strategy and offer attractive financial returns. We welcome the Douglas & Gordon team to the Foxtons Group and look forward to working with them to deliver for all of our customers."

Douglas & Gordon CEO James Evans commented:

"We're really pleased with the deal, and have great admiration for Foxtons as a business, brand and competitor.  Our offer is complementary to theirs and we know that with their backing, the Douglas & Gordon business can go from strength to strength.  We really look forward to working together to better serve buyers, sellers, landlords and tenants."

For further information, please contact:

Foxtons Group plc
Richard Harris, Chief Financial Officer Muhammad Patel, Investor Relations	[phone] [e-mail]
Sanctuary Counsel
Robert Morgan	[phone]

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