The deals will be deals for IMM Properties Ltd, trading under the name Gordon & Co in south London, and Stones Residential in Stanmore, north London, will be funded through the company’s existing cash resources.
Foxtons has this morning announced the acquisition of two estate agents for a total consideration of £10.55m which will be funded through the Company’s existing cash resources.
The Acquisitions are high quality agents, with strong lettings businesses that together generate over 80% of their total combined revenues from lettings services across 2,500 tenancies.
Foxtons says that the acquisitions represent another significant step forward in its strategy to deliver attractive total returns on invested capital, improve the resilience of our revenues and reinforce our position as London’s largest lettings agent.
Since 2019, Foxtons has increased the size of its lettings portfolio by 40% and now stands at over 27,500 tenancies, achieved both through acquisition and organic growth. In 2022, we expect lettings and financial services revenues, which are both resilient and recurring in nature, to represent around 70% of Group turnover.
Previous acquisitions continue to deliver returns in line with expectations. In particular, the Douglas & Gordon lettings business which has now been fully integrated into our highly scalable lettings infrastructure is expected to deliver operating profit in excess of £4m in 2022.
The Directors believe that the acquisitions will be earnings enhancing in 2022 and through the delivery of synergies will deliver an attractive return on invested capital. The terms of the Acquisitions are set out below.
Gordon & Co
Gordon & Co is being acquired for total consideration of £8.35m, adjusted for current assets less total liabilities at completion. £1.5m of the consideration is deferred for a period of 12 months subject to the business achieving certain performance targets. The business is being bought from certain private individual shareholders.
The acquisition of Gordon & Co 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), Gordon & Co’s unaudited revenue and operating profit for the 12 months ending 31 March 2022 was £4.0m and £0.1m respectively. Gross assets as at 31 March 2022 were £1.0m. Post-completion profitability will be significantly enhanced from historical levels through the delivery of synergies.
Stones Residential is being acquired for total consideration of £2.2m, adjusted for current assets less total liabilities at completion. £0.2m of the consideration is deferred for a period of 12 months subject to the business achieving certain performance targets. Stones Residential’s unaudited revenue for the 12 months ending 31 December 2021 was £1.3m.
Nic Budden, chief executive officer of Foxtons, commented: “Acquiring Gordon & Co and Stones Residential is a great opportunity for Foxtons to expand our coverage and reinforces our position as London’s largest lettings agent.
“We look forward to welcoming the teams to the Foxtons Group. Since 2019, we have acquired six lettings portfolios and grown our tenancies by 40%, which demonstrates good progress against our strategy to generate attractive returns for our shareholders.
“We now serve over 27,500 tenancies, which alongside financial services, deliver resilient and recurring revenues and represent around 70% of our Group turnover.”