The boards of LSL Property Services PLC (LON:LSL) and Countrywide PLC (LON:CWD) have confirmed they are discussing a possible merger.
The statements from the two estate agency companies had the usual caveats about there being no guarantee any merger will take place but if it does, it will bring to an end a torrid period for sales and lettings specialist Countrywide, which saw its shares slump in March of last year after issuing a profit warning.
The year before that, it raised £140mln in an emergency fundraising, albeit after backing down on plans to amend the pay schemes of its top brass after an embarrassing shareholder revolt.
The announcement of the fundraising in early August 2018 prompted a share price crash that saw around two-thirds of the market capitalisation of the company wiped off in a single day and it is fair to say that in terms of investment, shareholders would have been better off investing in property – a dishevelled two-up, two-down on a crumbling cliff edge in the Outer Hebrides, perhaps – than they have been putting their cash into Countrywide shares.
Countrywide operates under 58 different agency names and has around 850 branches in the UK; LSL operates under 18 brands and has around 300 branches.
In contrast to disaster-prone Countrywide, LSL has been having a decent time of it of late, with its share price rising steadily since the end of August last year from around 190p to 341p at Friday's close.
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Closing many branches, LSL actually did the right thing, not good for those losing their jobs, but at least a positive strategy, Countrywide plc should take note and start to adopt a similar strategy before the whole company is broken up. https://t.co/vTvZcJZyEp
— Andrew Stanton - Proptech & Real Estate Strategist (@StantonProperty) February 22, 2020