Residential lettings agency Belvoir (BLV) will become largest property franchise group in the UK if a deal to acquire Northwood GB for £22 million goes through. News of the deal boosts its shares by 3.4% to 121p.

The £35 million cap has entered a conditional agreement with Northwood, which operates 86 outlets nationwide and will add more than 17,000 managed properties to Belvoir’s offering. We gave our latest view on the investment case here.

The plan is to partly fund the acquisition through the placing of new shares in Belvoir at 112p per share, a 4.3% discount to the closing price on 6 June. This raised £2.5 million.

After the acquisition, Belvoir will have more than 54,000 managed properties and 301 outlets, a significantly increased market presence.

The terms of the deal include an initial consideration of up to £11.5 million and the balance as a two-year earn out. The placing will be conducted through an accelerated bookbuild and Cantor Fitzgerald Europe will be acting as sole bookrunner. In the year to 31 December, Belvoir reported pre-tax profit up 25% to £2.2 million.

Issue Date: 07 Jun 2016