Back in October it was well publicised that the Halifax estate agency chain was being sold by Lloyds bank to LSL Property Services. The sale finalised in mid January.
LSL operates Reeds Rains, Chancellors and Your Move. The deal will make the Your Move chain the UK’s largest if all Halifax branches are re-branded as such.
Even in a thoroughly depleted market, it was nonetheless a little surprising that the deal was done for a paltry £1. Previous estimates had been that the 218 offices might fetch £10 million. After all in 2007, a rather different market admittedly, Foxton’s, at one tenth the size with 24 branches, sold for over £300 million.
What is more deeply troubling however, is the fact that up to £36 million in cash seems to have also been channelled to LSL by Lloyds as a ‘sweetener’. This was to cover ‘restructuring, rebranding and working capital’. http://www.guardian.co.uk/business/2009/oct/16/lloyds-sells-halifax-estate-agencies
When you consider that Lloyds aka HBOS was bailed out by the tax payer to the tune of £14 BILLION in 2009, this means that you and I ‘own’ the bank by way of a majority public stake.
What that equates to in turn is that Joe Public has effectively bunged an estate agent £millions in order to persuade it to take ownership of a rival estate agency firm. One that it already owned itself. It’s akin to putting your car up for sale and then leaving cash to three times it’s value in the glovebox and letting someone drive off with it.
Let’s just add this up…
Halifax EA is valued at £10 million but sold for a quid.
A public owned bank gives the buyer £36m for good measure.
Total cost: £46 million.
Halifax estate agents was losing around £2m per annum. So it could have traded for another 23 years on the same basis and HBOS would have been no worse off if it had held it’s ownership of it. Given that no one expects the housing market to be in such a doldrum like state for quite that long, what was the real motive behind this deal? Lloyds says it wanted to ‘tidy up’ its operations and that estate agency just ‘doesn’t fit in anymore’.
Such a whimsical decision has cost the tax payer dearly and my view is that, given the cost, more questions certainly need to be answered by the decision makers.