Countrywide has delayed the £38m sale of its commercial consultancy business, driving down its share price.
The estate agency group was planning to sell off Lambert Smith Hampton (LSH) to Monaco-based entrepreneur John Bengt Moeller – founder of Hanseatic Holding, one of Germany’s leading property groups.
However the deal had not been inked by the 11 March deadline and Countrywide is now looking at other potential suitors.
Countrywide is also in separate talks to merge with larger rival LSL Property Services.
Countrywide’s shares were down slightly from 275p on Wednesday morning to 262p, before the Coronavirus scare hammered global stock prices.
Countrywide, which has a market capitalisation of £53.9m, is carrying a large debt burden that stood at £194.3m last June.
Considering legal options
In a statement, Countrywide said: “Following protracted efforts to effect completion and after agreeing a revised timetable to complete on more than one occasion, Mr Moeller has failed to complete the transaction in accordance with the final timetable set for completion.
“The company continues to engage with Mr Moeller and wish to effect completion as soon as possible. However, given the significant delay caused by him, the company has notified Mr Moeller that it will now also explore alternative options for the sale of LSH, and is considering its legal options to pursue Mr Moeller for damages and costs from continuing delay in completion.”
Countrywide says it has started discussions with another interested party that had come forward during the delayed completion period.
Reuters news agency reported Moeller, currently director of Great Global Holdings, as saying the delay was the result of “several regulatory compliance challenges, which are outside our control”, adding that he still wished to complete the deal.
Countrywide also released a trading update on the 2019 financial year. Total group income was £498m, down slightly on the 2018 figure of £515m, which it describes as “a highly resilient performance in a challenging market”. The figure also reflected a loss of tenant fees income of roughly £12m.
The company said it had seen a “positive mood swing in public sentiment” through the early part of 2020, which was reflected in a strong start in agreed sales that were “ahead of the board’s expectations”.
It added: “Whilst we have seen some softening in recent days as a result of Covid-19, it is too early to assess that impact.”
Countrywide’s full-year earnings for 2019 are due to be released later this month.