LSL Property Services Plc Withdraws Plan To Merge With Countrywide Plc

On 16^th March 2020, LSL Property Services Plc stated that it has revoked the proposal to merge with Countrywide Plc (LON:CWD). After this news, the share price of LSL Property Services Plc closed at GBX 174.50 on Monday, a decrease of GBX 72.50 or 29.35 per cent. The stock of the company touched its 52-week low price of GBX 170.0 on the same day.

Additionally, the share price of the Countrywide Plc has also dropped by GBX 83.65 points or 50.80 per cent to the price of GBX 81.0 on the same day.

During February 2020, both the companies had disclosed that they were in discussions regarding a possible all-share integration. As per media report, the merger of these two company could have established a company with more than 14,000 employees and 1,000 estate agency branches.

Countrywide Plc came into existence in the year 2013 amidst a buoyant housing market but sustained hefty losses and a massive burden of debt in a few past years. The company is the most significant estate group in term of branches and rents and sells estates via sixty upmarket brands which include Gascoigne-Pees, Bairstow Eves, Hamptons international, etc. After the failure of the merger talks, the company remains confident of the robustness of the business from the point of view of an independent, self-sustaining company and it achieved an excellent beginning to the current year 2020.

The company observed in its trading updates that the public sentiments have changed in a positive manner, which has been exhibited in a strong start to sales from the beginning of the year 2020. However, it has seen some declining results due to novel coronavirus while it is too early to assess the outcome as per the company.

According to the mortgage lender Halifax’s analysis, the United Kingdom’s house prices increased in February 2020. The prices have increased continuously for the last four months, which exhibits rising public confidence in the housing market.

Overview of LSL Property Services PlcÂ

LSL Property Services Plc (LON:LSL) is a prominent housing property service provider to its major consumer groups, including both assessing businesses and estate agencies. The consumer services include surveying, lettings, general insurance brokerage, residential sales, pure protection and mortgages & conveyancing. The company’s mortgage lender services also include asset management & property management and valuations & panel management services.

LSL – Outlook

As per the preliminary result of the company for the year ended 31^st December 2019, which was published on 10^th March 2020, the company’s revenue declined 4% in FY2019, but Underlying Operating Profit performance was positive for the year 2019. The company is expected to implement a variety of proactive operational and strategic initiatives throughout its business lines, expanding the scope of prospects across the group.

The company stated in its report that the spread of the novel coronavirus might impact consumer behaviour and confidence, which further could have a material impact on the residential housing market. The company also concerned about its branches and offices, which may be closed for some time if consumer-handling activities require moving out to less effective remote working arrangements.

LSL – Share price performance

(Source: Thomson Reuters)

On 17^th March 2020, at around 09:56 AM (GMT), by the time of writing this report, the stock of LSL Property Services Plc was trading at a price of GBX 169.3 per share on the London Stock Exchange, a decrease in the value of around 2.97 per cent or GBX 5.20 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 174.50 per share.

The share price of LSL Property Services Plc recorded at GBX 345.0 as on 24^th February 2020 was its 1-year peak price, whereas the share price recorded at GBX 169.3 as on 17^th March 2020 was the 1-year low share price. The current share price was lower by 50.93 per cent from the 1-year high price.

The beta of the company’s stock has been reported at a value of 1.32, which shows that movement of the share price is of higher volatility against the movement in the comparative benchmark index.

The annual dividend of the company was reported at GBX 10.90 per share, and the annual dividend yield was reported to be 6.25 per cent at the time of writing.

At the time of writing, the company’s market capitalization was reported at GBP 181.76 million with respect to the stock’s current market price. The free float and outstanding shares of LSL Property Services Plc stood at 91.11 million and 104.16 million, respectively.

Overview of Countrywide Plc

Countrywide Plc (LON:CWD) is the biggest property services group in the United Kingdom. The company provides a wide variety of services and products to meet all property requirements. The company has more than 10,000 employees who deliver the best results for its customers. The company is listed on the London Stock Exchange, and its stock is a constituent of the FTSE AllSmall Index.

CWD – Trading Updates

On 11^th March 2020, the company announced a trading update relating to its unaudited results.

Due to highly reliable performance in a tight market and after absorbing the loss of tenant fees income of £12 million, total Group income for the year 2019 decreased to £498 million as compared to £515 million in the year 2018. The company is looking for the gains from its 'Back to basics' turnaround Plan. Lastly, for the year ended 31st December 2019, the Adjusted EBITDA is likely to be better than the prior-year and ahead of the Board's expectations.

CWD – Share price performance

(Source: Thomson Reuters)

On 17^th March 2020, at around 09:09 AM (GMT), by the time of writing this report, the stock of Countrywide Plc was trading at a price of GBX 72.05 per share on the London Stock Exchange, a decrease in the value of around 11.05 per cent or GBX 8.95 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 81.0 per share.

The share price of Countrywide Plc recorded at GBX 479.0 as on 18^th March 2019 was its 1-year peak price, whereas the share price recorded at GBX 56.95 as on 17^th March 2020 was the 1-year low share price. The current share price was lower by 84.96 per cent from the 1-year high price, whereas the current share price was higher by 26.51 per cent from the 1-year low price.

The beta of the company’s stock has been reported at a value of 2.2, which shows that movement of the share price is of higher volatility against the movement in the comparative benchmark index.

At the time of writing, the company’s market capitalization was reported at GBP 26.54 million with respect to the stock’s current market price. The free float and outstanding shares of Countrywide Plc stood at 30.83 million and 32.76 million, respectively.