Belvoir agrees all-share merger with Property Franchise Group

Belvoir Group and the Property Franchise Group announced a recommended all-share merger on Wednesday, to create a combined property franchise business.

The firms said the merger would result in a significant increase in scale, with more than 930 franchise locations managing around 152,000 tenanted properties across the UK, and an estimated annual sale of over 28,000 properties.

For the year ended 31 December 2022, the combined revenue of TPFG and Belvoir exceeded £60m, with 41% being recurring income.

They reported management service fees of around £27m, and adjusted EBITDA of £22.5m, while the combined group's market capitalisation was expected to be around £214.4m.

The combined group's board would include key figures from both companies, with Gareth Samples as chief executive officer, David Raggett as chief financial officer, and Michelle Brook as an executive director from Belvoir.

Paul Latham would meanwhile serve as the combined group's chair.

On completion of the merger, Belvoir shareholders would hold 48.25% of the enlarged issued share capital of TPFG, while TPFG shareholders would hold 51.75%.

The merger would be carried out through a court-sanctioned scheme of arrangement, under which each Belvoir shareholder would receive 0.806377 new TPFG shares for each Belvoir share.

Based on the exchange ratio and the closing price of 344p per TPFG share, the merger valued each Belvoir share at 277.4p, making Belvoir's equity worth £103.5m and TPFG's £111m.

The merger had already garnered substantial shareholder support, with Belvoir shareholders representing 31.2% of its issued share capital committing to vote in favour of the merger.

TPFG shareholders representing 56.7% of that firm’s issued share capital had also indicated their intention to support the merger.

Both the Belvoir and TPFG directors unanimously recommended that their respective shareholders vote in favour of the merger, considering it to be in the best interests of their companies and shareholders.

The timetable for the merger would see it likely become effective in the first quarter of the year, subject to regulatory approvals and other conditions.

“We believe that the merger represents a compelling opportunity for all shareholders,” said Paul Latham, non-executive chairman of the Property Franchise Group.

“Belvoir brings further breadth through its nationwide network and a financial services business which will be complementary to our current offering.

“The merger will enable us to continue to grow in the sector and, ultimately, deliver greater value to shareholders of the combined group.”

Jon Di-Stefano, non-executive chairman of Belvoir, added that the merger would combine two businesses with much in common, each supporting a network of “entrepreneurial franchises”, to create one of the UK's largest multi-brand lettings and estate agency groups combined with a growing financial services business.

“With their complementary geographic footprints providing both scale and diversification across a variety of high street and hybrid brands combined with high levels of recurring revenue, we feel sure that the combined group will provide a robust platform from which to grow.”

At 0903 GMT, shares in the Property Franchise Group were flat at 344p, while those in Belvoir Group were up 3.96% at 266.65p.

Reporting by Josh White for Sharecast.com.