Foxtons has this morning announced that it’s selling off the sales wing of a rival London agency that it bought just last year.
The agency bought last year was Douglas & Gordon - for a reported £15.5m - which is now to return to operations as a separately owned sales agency under its own name.
However the lettings department of D&G is to be integrated into Foxtons’ own branded rentals division.
A statement to shareholders describes the terms of the deal this way: "The D&G sales business is being disposed of for nominal consideration to its current CEO, James Evans. Cash of £3.7m will be left in the business to cover working capital requirements and retained liabilities, which would otherwise have had to be incurred by the Group. Under the terms of the Disposal, D&G will operate under restrictive covenants which protect the lettings book assets retained by Foxtons, including existing customer contracts and relationships, and the employees that are transferring to Foxtons."
The D&G acquisition by Foxtons last year came during a controversy over Foxtons' failure to return furlough money to the government despite the company benefiting from a strong housing market.
There was also controversy over a bonus issued to Foxtons chief executive Nic Budden while at the same time the company took millions of pounds in taxpayers’ money in the form of business rate exemptions and furlough funding; unlike several other agencies, it has shown no sign of returning the public money.
This morning Budden said: “D&G has performed extremely well over the last ten months under Foxtons ownership and this next step is a real win-win for both parties to the transaction. We have an excellent track record of acquiring and integrating lettings businesses and expect to deliver significant growth in operating profit through the integration of the D&G lettings business into Foxtons highly scalable infrastructure. The D&G sales business will remain as an independent brand under its current leadership and we wish them well for the future.”
And D&G chief executive James Evans adds: “I am thrilled to have the opportunity to lead D&G as an independent brand and excited by the prospect of continuing to grow the business and serve our customers as we have done for many years. Foxtons is a fantastic business, I spent many happy years there myself and I know that our transferring staff and clients will have the same great experience I had."