Connells has revealed that it’s to keep the existing Countrywide branch structure and staff headcount when the acquisition process is completed next month.
However, uncertainty exists over the future of Countrywide’s HQ in Milton Keynes, and three areas of back-office duplication have been identified where savings could be made by increased integration.
On New Year’s Eve it was revealed that Countrywide’s beleaguered board had unanimously accepted Connells’ revised offer for the firm. Each Countrywide shareholder will be entitled to receive 395 pence in cash for each share. This means Connells' initial £82m offer has been increased to around £230m.
All of Countrywide's lenders will be repaid in full and Connells will provide additional investment in Countrywide's technology, branch network and staff.
Now the companies say: “As a result of its due diligence review, sector knowledge and management expertise, Connells envisages that the business of Countrywide would continue to operate materially in the same way without significant disruption to either the Connells or Countrywide businesses once Countrywide has been fully integrated with Connells.”
That integration will be completed within the first half of this year.
Connells says “there are no specific identified potential cost savings which would involve a material reduction of employee headcount.”
And it adds that it “intends to maintain and enhance Countrywide's current service offering and invest in its branches, technology and people to put the Countrywide business back on a solid footing. Connells does not anticipate making any material changes to the locations or functions of Countrywide's branch network.”
There has been a substantial cull of Countrywide branches in the past three years - which happened despite the former management of the agency on some occasions suggesting closures were not even under consideration.
However, as part of the new deal Connells says there are likely to be areas of duplication in what it calls “operational infrastructure” where savings can be made.
- duplicated costs across some head office and/or centralised administration functions, which could result in some headcount reductions and relocations;
- IT expertise and best practices across both Connells and Countrywide; and
- savings from “the removal of listing, administrative and other related operational expenses.”
Connells’ existing HQ is only nine miles away from Countrywide’s, so there are likely to be additional savings on premises.
In terms of senior management, all non-exec managers of Countrywide are expected to quit their positions upon completion of the acquisition in the next few weeks, and Connells states it has “not entered into, and is not in discussions on proposals to enter into, any form of incentive arrangements with any member of the Countrywide Board or senior management who are interested in Countrywide shares.”
Countrywide is currently trades on the London Stock Exchange.
Once the acquisition is completed, a request will be made by Connells to the Financial Conduct Authority to cancel trading in Countrywide shares and to de-list Countrywide - from that time onwards, Countrywide will return to operating as a private limited company.