Lloyds to pay LSL £22m premium for agency deal
LSL Property services will receive a £22.2m premium as part of its acquisition of Halifax Estates Agencies.
As The Negotiator revealed earlier this morning, LSL has agreed to snap up Halifax Estate Agencies' 218 branches for £1. But the terms of the deal include a minimum of £22.2m in cash, known as a ‘reverse premium’, which will cover restructuring costs and provide working capital for the business, which also includes 130 mortgage consultants.
Speaking exclusively to The Negotiator, LSL chief executive officer Simon Embley (pictured), says: “It will cover certain liabilities, including property dilapidation, the cost of rebranding the network and other restructuring costs, plus the cost of marketing launches. There will also be a cash flow provision because the pipeline we are inheriting won’t be huge. This will help us generate cash next year.”
Embley claims that he will retain 879 of the 1050 roles he will acquire as part of the deal. “We’ll be making a number of redundancies, but we won’t know the exact number yet because there’s still three months until the deal completes and we can’t do any restructuring until day one of completion.”
But he adds: “We are going to invest in the business and its people. Agency is a core business for us; it wasn’t for Lloyds. This isn’t a slash and burn business in any way, shape or form.”
The acquisition will see the Halifax agency branches integrated into LSL’s existing agency brands, Your Move, Reeds Rains and Intercounty, will make LSL the second largest estate agency network in the UK.
LSL believes the deal, which is scheduled to complete by January 15 2010, will enhance group earnings by 2011, assuming that there is a modest market recovery. According to a statement out from LSL this morning, Halifax Estate Agencies’ assets were worth £38.4m as at December 31 2008.
Confirmation of the deal, which includes Halifax’s asset management business, comes just two days after the two parties confirmed they were in talks, as The Negotiator reported on Tuesday. A statement issued by Lloyds Banking Group this morning reveals that the decision to sell the estate agency business, which has been loss making for some time, follows an internal strategic review, which concluded that an estate agency operation is no longer integral to its business model. It adds that as part of the transaction, the 121 Halifax banking counters located within the estate agent offices will close early next year.
The deal remains subject to shareholder approval. A General Meeting is planned for next month.