It now looks likely that Hunters will be taken over by The Property Franchise Group after several months of talks, subject to shareholder approval.
A statement to shareholders of both companies this morning, recommending approval of the deal, says there are four key advantages:
- Enhanced scale and geographic reach: “The enlarged group will benefit from increased scale with more than 400 physical branches, managing in excess of 70,000 tenanted properties managed and selling more than 20,000 properties per annum” says the statement.
- Synergies: "The TPFG Board has identified areas of potential synergies, which would provide a stronger platform for further organic growth and further enhancement of the progressive and resilient dividend policy. These are anticipated to be largely cost synergies including but not limited to: leverage of IT expertise, operational savings from duplicated costs across some administrative functions and operational cost savings from the cancellation of Hunters' AIM quotation."
- Acceleration of financial services strategy: "The Enlarged Group would have the scale to make effective use of The Property Franchise Group's plans to create a pool of 100 financial advisers, as well as to justify further recruitment in this area. To date, neither The Property Franchise Group nor Hunters has been able to fully exploit the significant opportunities that exist in this area."
- Strengthened management team: "It is proposed that the executive directors of both The Property Franchise Group and Hunters will remain within the Enlarged Group following completion of the Acquisition. It is proposed that Glynis Frew, Chief Executive of Hunters, will join the Enlarged Group as an Executive Director of The Property Franchise Group whilst Ed Jones will join as Group Finance Director and Company Secretary, a non-board position, while remaining an Executive Director of Hunters. Gareth Samples will remain as the TPFG Group CEO and David Raggett as the TPFG Group CFO."
On the controversial issue of job losses, the only reference made so far in the statement is this:
"The Property Franchise Group does not intend to initiate any material headcount reductions within the Hunters Group as a result of the Acquisition and expects that existing employees of the Hunters Group will continue to contribute to Hunters' ongoing success. However, to the extent that there are operational inefficiencies or a duplication of functions or roles within the Enlarged Group, this will result in a limited number of headcount reductions.
"At this stage The Property Franchise Group has not yet developed a proposal as to how any such headcount reductions might be implemented and will only develop and implement such a proposal once [a review] has been completed. Any implementation of headcount reductions by the Enlarged Group will be subject to comprehensive planning and engagement with employees and consultation with employee representatives as required by applicable law. Any affected employees will be treated in a fair and equitable manner."
The acquisition values each Hunters share at 74.9p and the entire issued and to be issued share capital of Hunters at approximately £25.2m, which represents a premium of 28 per cent on the closing price per Hunters share of 58.5p on December 3.
Kevin Hollinrake, the Conservative MP who is chairman of Hunters, says: “We founded Hunters almost three decades ago with a single small office in York and a huge ambition to offer a brilliant service to our customers and to become the nation’s favourite property agency. Our ambition for our customers and our brand are undimmed and we see this consolidation as the vital next step that allows us to invest in the services, training and technology our customers and franchisees need.
"The success we have achieved is a tribute to the incredible efforts of the thousands of people who provide the service on the ground and the passion and commitment of our management team. I am so grateful, and indeed moved, that every member of our network remains faithful to our original vision and values and I know that they will continue to do so.”
The combined agencies will now have three national brands – Martin & Co, Hunters and EweMove - plus six regional/local ones, CJ Hole (Bristol), Ellis & Co (London), Parkers (Oxfordshire), Whitegates (North of England), Mullucks (Essex) and Country Properties (Hertfordshire & Bedfordshire).
The franchise network will have over 70,000 tenanted managed properties across the UK; over 400 High Street branches, and aims to sell more than 20,000 properties per annum.