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About 3 weeks ago 60
As soon as I got the news the morning I wrote to my good friend Glenn Ackroyd to offer him my congratulations.
Both Glenn and EweMove have been supporters of Property118 from the outset. Glenn was one of the first to become a founder member of Property118 Action Group.
The business was sold to Martin and Co. for £15 million; made up of £5 million cash payment at completion and the issue of £3 million of new ordinary shares, followed by a deferred payment of up to £7 million dependent on performance.
I can’t help but wonder what our own investment into LettingSupermarket.com might now be worth.
Background on EweMove
Launched in 2014, EweMove has a growing network of over 90 franchisees. The EweMove franchise model combines the recruitment of local property experts (“LPEs”) with a centralised technology platform whilst retaining the traditional features of a full estate agency service and a consumer fee structure predicated on completed sales, rather than listings. EweMove has shown significant and sustained growth and is a multi-award winning agency, voted the UK’s ‘No.1 Most Trusted Estate Agent’ by Trust Pilot in 2016.
The Board of MartinCo believes the Acquisition, which will operate as a subsidiary of the Group, is highly complementary to its existing business. The Board believes that the UK market could accommodate approximately 800 EweMove LPEs and that EweMove’s proprietary technology platform is fully scalable allowing for significant growth opportunities. Importantly, the deferred consideration of the Acquisition will be determined, in part, by the overall profitability of the Group, not solely of the EweMove business.
Development of multi-brand strategy – the addition of the EweMove business is in line with MartinCo’s established multi-brand strategy and augments the existing model by achieving immediate hybrid/on-line capability for the Group. This market sector now accounts for circa 3% of all listings.
Further growth at EweMove will be self-funding.
Strengthened management – the EweMove management will join the senior executive team taking on responsibility for technology and marketing across the Group.
Increased UK footprint – the acquisition will add 90 franchisees to the Group’s network of 287 trading offices.
Addition to lettings portfolio – EweMove has a rapidly expanding portfolio of properties under management which currently stands at 1,300 properties.
Further details of the Acquisition
MartinCo is acquiring the entire issued and to be issued share capital of EweMove, and its subsidiary Ewesheep Limited, for an initial consideration of £5 million in cash and £3 million through the issue of 2,321,550 new ordinary shares of 1p each in the Company (“Consideration Shares”). The £5 million in cash will be paid using existing cash resources and debt drawn down from the Company’s existing debt facility.
In addition, deferred consideration of £7 million will be payable dependent on performance criteria linked to EBITDA for the enlarged Group for the full financial year ending 31 December 2018.
Financial Information on EweMove
For the 12 month period ended 30 June 2016, based on unaudited management accounts, EweMove generated revenues and profit before tax of £1.65 million and £0.12 million respectively. As at 30 June 2016, EweMove had gross assets of nil.
Admission of Consideration Shares
An application has been made for the Consideration Shares to be admitted to trading on AIM (“Admission”). It is expected that Admission will occur on 7 September 2016.
Following Admission, the Company will have 24,321,550 ordinary shares in issue admitted to trading on AIM. This figure may be used by shareholders as the denominator by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA’s Disclosure and Transparency Rules.
Ian Wilson, Chief Executive of MartinCo, said:
“Our strategy as a Group remains focused on traditional high street based lettings and estate agency model where we continue to see growth. This Acquisition provides the Group with a strategically important foothold in the rapidly developing market for online estate agency and letting services. We see the Acquisition as complementary to the wider Group strategy with the hybrid model, a people business which combines an online platform with truly local presence and customer service focus, differentiating it from other online offerings.”
“The Acquisition is also a logical development of the Group’s multi-brand strategy. Our stable of six property brands now includes a UK-wide lettings business, four strong regional players with brand provenance dating back to 1850 and now a “hybrid” agency. MartinCo continues to be focused on creating value for shareholders by leveraging its scale and over 30 years’ experience as a franchisor to build a significant share of the UK residential lettings and estate agency market.
“I have also been deeply impressed by EweMove’s management and their agreement that overall Group profitability should determine the final consideration paid. This ensures both existing and new management are aligned in the shared goals and objectives for the good of the wider Group.
“Finally, I’m delighted to welcome EweMove’s management to the senior executive team. Their insight will be invaluable in developing our use of on-line marketing techniques and technology across the Group.”
David Laycock and Glenn Ackroyd, founders and Managing Directors of EweMove, said:
“MartinCo is a forward looking company and we are hugely excited about the opportunities that this transaction brings. We look forward to working with the MartinCo team and are confident that the enlarged Group will be able to progress strongly with its broadened range of offerings within the market place.”
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