Connells has revealed that the Financial Conduct Authority (FCA) has given its blessing to the company’s acquisition of Countrywide, leaving just one last hurdle for the deal to clear – a potential investigation by the Competition and Markets Authority (CMA).
Although Connells and Countrywide are both established companies, Countrywide is a regulated ‘appointed representative’ of financial products, and therefore the FCA is required by law to assess whether Connells is suitable to be a controller of an ‘authorised firm’.
“Connells has confirmed that the condition relating to such approval has now been satisfied,” a joint statement from both companies says.
Based on this FCA approval, all that now remains legally is for a court hearing to take place to formally approve the acquisition, which will take place on 4th March and take effect on 8th March.
But one potential threat to the deal would be if the CMA decided to launch an investigation on the basis that it was anti-competitive and put the two combined companies in a too dominant a market position.
And based on Rightmove listings data, the combined company will have a market share of property sales totalling just shy of 10%, making it far and above the largest estate agency in the UK, followed by Purplebricks and Hunters.
An investigation would be within the CMA’s remit. Its own rules stipulate that it can look at mergers including acquisitions and joint ventures where two or more firms ‘cease to be distinct’.
Also, the turnover of the acquired firm (i.e. Countrywide) must exceed £70 million, or ‘the two companies supply at least 25% of the services supplied to the market and the merger increases that share of supply’.
The Negotiator approached the CMA but said it could not comment.