Countrywide plc announced today that a wholly owned subsidiary of Countrywide has entered into an agreement with Lambert Smith Hampton Acquisitions Limited, andSankaty European Investments Sarl (Sankaty) to acquire Lambert Smith Hampton Limited, for a total cash consideration of £34.1 million (approx. €40.55 million).
The Acquisition is to be structured by way of a share sale, with Countrywide to acquire the entire issued share capital of Lambert Smith Hampton, free from all existing non-trade borrowings and related security. The Acquisition will be financed from Countrywide’s existing cash resources.
Completion of the Acquisition is conditional upon:
(i) Lambert Smith Hampton first being sold to an affiliate of Sankaty pursuant to a process undertaken by an administrator on behalf of Lambert Smith Hampton Acquisitions Limited, which is scheduled to take place today, and
(ii) Countrywide receiving change in controller approval from the Financial Conduct Authority.
The Lambert Smith Hampton business
The Lambert Smith Hampton group (“LSH”) is one of the largest commercial property consultancies in the UK and Ireland with 26 offices and 861 employees. Founded in 1773, and incorporated as a business in 1990, LSH has built a high quality network of experienced commercial property specialists. It works with investors, developers and occupiers in both the public and private sector, managing commercial property portfolios through commercial property logistics and supply chain advice, rent reviews and building surveying.
The 2012 audited statutory accounts show LSH reported sales of £64.1 million (approx. and an operating profit of £5.0 million. Gross assets of the business are approximately £17.7 million as at August 2013.
LSH was acquired in a Management Buyout from WS Atkins plc in 2007 (the MBO). It has a range of blue chip clients across the banking, finance, transport, telecoms and retail sectors, including the BBC as well as more than half of all London Borough Councils and over 1000 train stations. LSH has recently completed the sale of the BBC Television Centre for £200 million and sold 800 former railway sites raising £300 million.
Whilst business performance has remained robust at an operational level, the significant level of debt taken on by Lambert Smith Hampton Acquisitions Limited at the time of the MBO in 2007 has resulted in LSH struggling to meet its debt service obligations. As part of the Acquisition, Lambert Smith Hampton and its subsidiaries will be discharged from any liability in respect of the legacy debt from the MBO and placed on a firm financial footing as part of the Countrywide group.
Acquisition rationale and benefits
Countrywide is the UK’s largest residential Property Services Group but currently has limited commercial property activities. A part of Countrywide’s strategy is to grow its Land and Residential Development & Investment businesses and this acquisition supports this strategic goal. It also underpins the growth of the Company’s Land and New Homes businesses and estate agency opportunities driven by LSH’s pipeline of future mixed-use developments which include residential units. The stronger links between the residential and commercial activities will strengthen Countrywide’s businesses going forward.
There is clear growth potential in the UK commercial property market. The market is still fragmented and LSH, even as a scale commercial business,currently has less than a 3% market share, providing an opportunity for further market penetration. The Company also believes that activity in the commercial markets is starting to improve and now is the right time to build on its position in this market.
Countrywide expects that there are several benefits that can be achieved through the Acquisition. It is expected that the Acquisition will be immediately earnings enhancing and will underpin the growth opportunity in its Land and New Homes businesses.
Management and brand
Countrywide will retain both the Lambert Smith Hampton brand and Ezra Nahome, CEO and the Management Board, which will continue to shape and drive LSH’s decisions and objectives. LSH will form a new division of Countrywide and will report directly to the Countrywide plc Executive Board and Grenville Turner.
Grenville Turner, Group CEO, Countrywide plc said:
“The acquisition of LSH is an important part of Countrywide’s continued growth strategy. It will enhance our footprint across the UK and will help to drive more opportunities to our teams operating our core Land and New Homes, and Residential Development & Investment businesses.
We have a successful track record of acquiring and managing businesses, and being part of Countrywide plc will bring a wealth of new opportunities, fresh investment, economies of scale, and expertise to LSH. We are committed to the continued development of LSH as it becomes an increasingly important player in the commercial property market. We are looking forward to working in partnership with the LSH team to drive the business forward together.”
Ezra Nahome, CEO, Lambert Smith Hampton said:
“This heralds a new, exciting chapter for LSH and being part of the Countrywide group will provide us both with significant opportunities.”
Source: Countrywide plc