ESTATE AGENT Sherry FitzGerald is set to sell its London business in a deal that will net the Irish company more than €44 million.
The company has agreed to sell its London estate agency, Marsh & Parsons, to publicly quoted LSL Property Services for £53.1 million (€62 million) in cash and loan notes.
Sherry FitzGerald owns 72 per cent of Marsh & Parsons. The London operation’s management and staff own the remaining 28 per cent.
The deal, which is subject to approval by shareholders of LSL, will net Sherry FitzGerald €44.6 million for its 72 per cent stake.
The Irish company invested about €11 million in Marsh & Parsons between 2005, when it first bought into the London company, and 2007.
It is likely that Sherry FitzGerald will use the proceeds of the sale to pay down €16 million that it owes to its banks.
Part of the proceeds will be distributed to shareholders, who have debts totalling €11 million, stemming from an agreement in 2007 to buy out a number of other investors in the group.
It is understood that they will use the distribution to clear those liabilities.
The company’s debt dates back in part to 2003, when it delisted from the Irish Stock Exchange, on which it was quoted, and went private.
The biggest shareholders in the company are Mark FitzGerald, who owns more than 30 per cent of the business, and his colleague, Philip Sherry.
All shareholders are involved in running the business.
Sherry FitzGerald is the largest estate agent in the Republic. It employs 200 people directly and a further 200 to 250 indirectly in franchises and affiliates.
Sherry FitzGerald has tried to avoid cutting jobs in the face of the property slump, although employees have taken salary reductions, as it believes it needs to maintain its current infrastructure to stay in business.
It is likely that it will invest some of the Marsh & Parson sales proceeds in the business to position it to exploit any recovery in the Republic’s property market.
The company originally bought its majority stake in Marsh & Parsons in 2005 for about £2.7 million. It then added another agency, Vanstons, for a similar sum.
Sherry FitzGerald spent further sums on developing the London operation, bringing the total amount that it invested in it to about €11 million.
LSL told shareholders yesterday that the London business was profitable and had a strong balance sheet.
Marsh & Parsons has 13 offices in central and southwest London, including five outlets in Kensington and Chelsea.
In the year to December 31st, 2010, Marsh & Parsons reported sales of £23.3 million and a profit before tax of £6.3 million.
Net assets as at December 31st, 2010, were £6.8 million. Net debt at the end of last June was £6.3 million.
LSL expects the purchase to boost both revenues and earnings.
The company is regarded as a leading London property business and will operate under its own brand within the LSL group.
