Foxtons has bought seven-branch rival Ludlow Thompson for £10m from its retiring co-founders Stephen Ludlow and David Thompson.
The purchase is largely a lettings play as Ludlow Thompson generates approximately 70% of its revenue from this sector of the housing market, which it entered 30 years ago.
Foxtons has previously said it will not grow via new branch cold starts but by acquisition and this is its second this year following its Atkinson Macleod deal back in March, all part of its strategy to grow “non-cyclical and recurring revenue streams” or more plainly put, not property sales.
The firm has grown its lettings by portfolio by 40% since 2020 when it decided to grow via purchases, and now runs 28,200 tenancies. These two recent deals have given it an extra 2,800 tenancies to add to its lettings book so far this year.
LETTINGS FOCUSED
“Foxtons is now a lettings focused business, with over 70% of Group revenue derived from it, which is non-cyclical and recurring in nature, and decouples the group’s earnings from the volatility of the sales market,” it says.
“The acquisition will support future earnings growth as it is integrated into Foxtons scalable operating platform, enabling synergies to be unlocked and attractive returns on invested capital to be realised.”
The deal appears to be a good one – Ludlow Thompson last year turned over £7.3 million and made a £100,000 profit but it will cost Foxtons much less to service the landlords and tenants involved via its existing operation, which is absorbing the firm’s activities.
Others cost cutting includes integrating Ludlow Thompson into the Foxtons branch network.
Guy Gittins, Foxtons CEO, says: “We are delighted to have completed our acquisition of Ludlow Thompson.
“Having established a leading position in its local markets and a reputation for delivering the best results for customers, it is clearly a business which we believe is a perfect fit for Foxtons.”
CO-FOUNDERS
Stephen Ludlow and David Thompson, the firm’s co-founders, add: “Having founded the business 30 years ago, taking the decision to sell the business was a major milestone for us, our colleagues, and our clients.
“We have admired Foxtons for a long time and Foxtons was a natural fit for us, in fact, our processes, our culture and market positioning is based on the Foxtons model.
“As we retire from the business, we would like to thank all our customers for their long-term support along with our colleagues for many years of loyal service and look forward to seeing the new and exciting opportunities that ownership under Foxtons will bring.”
