Franchise lettings giant Belvoir is to attempt a merger between itself and The Property Franchise Group, owners of Martin & Co, after it today made an official offer to start direct discussions with both TPFG and Belvoir shareholders.

Belvoir’s directors believe a merger between the two franchise networks would be in the “best long-term interest of both companies and their respective shareholders”.

But Belvoir has gone public with the proposed merger only after the TPFG board rejected its overtures despite having previously shown a willingness to engage on the subject, Belvoir says.

The time is ripe for industry consolidation, Belvoir CEO Dorian Gonsalves (pictured left) says, hinting at the difficulties that may be ahead for the lettings sector following the fees ban later this year, and “that a more broadly based multi franchise group will be better positioned to leverage the opportunities in the sector and that the shareholders of the respective companies are looking for such leadership”.

The proposed merger would, through a mixture of cash and shares, see TPFG shareholder take a 34.6% stake in a new enlarged group and create a UK property franchise group with 683 outlets and 108,000 tenanted managed properties.

TPFG shareholders would receive new shares in Belvoir and cash, based on 52.2p a share, in a deal worth £33.7 million.

Belvoir merger with Martin & Co

“With the changing dynamics in the industry, the combination of TPFG and Belvoir would, in the opinion of the Belvoir board, cement a more robust market position for the Enlarged Group,” the Belvoir pitch document says.

Belvoir says the new management of the enlarged group would see Belvoir founder Mike Goddards becoming Chairman, TPFG Chairman Richard Martin becoming Non-Exec Deputy Chairman, Dorian Gonsalves as CEO and Louise George as CFO.

To finance the merger, Belvoir says it would set up a new credit agreement with a “leading UK bank”.