The much anticipated takeover of Countrywide by LSL has been called off following a short statement to the City this morning.
After confirming that it had been in discussions with its competitor since February 24th, LSL has said that: “LSL today confirms that it does not intend to make an offer for Countrywide”.
The abrupt end to discussions comes a week before the 23rd March deadline when LSL had to make an offer or withdraw under London Stock Exchange takeovers and mergers rules.
Several sticking points have emerged in recent days that may have scuppered the deal.
These include the collapse of Countrywide’s attempt to sell of its commercial property arm Lambert Smith Hampton, which got in to difficulties after Monaco-based buyer John Bengt Moeller experienced difficulties finding the required finance to complete the deal.
And in an interview recorded last week and seen by The Negotiator, former Countrywide lettings boss John Hards suggested one of the other contentious sticking points would have been who sat on the board of the merged entities.
Hards also says that LSL would have carried out a comprehensive review of the Countrywide brands and, although he believed it would not have lead to significant brand closures or sell-offs for commercial reasons, The Negotiator understands that it is likely that any ensuing CMA investigation into the merger would have identified many areas where the two organisations were keen rivals.
LSL would also have been concerned by Countrywide’s debt. Part of its plan to sell off LSH was to raise £38 million to reduce its reported £100 million debt.
“As announced by Countrywide on the 11th March, the Company has been seeing the benefits from its ‘Back to basics’ turnaround plan, with continuing operations having returned to growth in profitability. The Board of Countrywide remains confident in the strength of the underlying business as an independent Company.
“The Company has seen a positive mood swing in public sentiment through the early part of 2020 which we have seen reflected in a strong start in agreed sales which are ahead of the Board’s expectations through February 2020. Whilst we have seen some softening in recent days as a result of Covid-19, it is too early to assess that impact.”