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Online estate agents in £100m merger talks

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The online estate agents eMoov and Tepilo are in talks about a ?merger that would pave the way for the creation of a publicly quoted rival to Purplebricks, the industry leader.

Sky News has learnt that the two companies are at an advanced stage of negotiations about a deal, with an agreement likely to be struck in the coming days.

The transaction would also involve the acquisition of an unnamed third-party estate agent, as well as a multimillion pound deal with Channel 4’s Commercial Growth Fund, which provides free airtime on the broadcaster in return for equity stakes in technology start-ups.
Sources said the combined business would be valued? at in excess of £100m, assuming the various components of the deal came together.
The group would then seek a London stock market listing in the autumn, according to insiders.
Cenkos Securities, the investment bank, has been lined up to take the company public.
The planned merger between eMoov and Tepilo, which was set up by the Channel 4 presenter Sarah Beeny in 2009 and is backed by the former Daily Express owner Richard Desmond, is part of an anticipated wave of consolidation in the sector.
Rising customer acquisition costs? and investors’ scepticism about the ability of smaller players to challenge Purplebricks have prompted numerous rounds of merger talks between online estate agents in the last two years.
Other significant operators in the sector include HouseSimple, which is part-owned by the Carphone Warehouse co-founder Sir Charles Dunstone, and easyProperty, which merged with the parent company of the Guild of Property Professionals last year.
OnTheMarket, a property portal used by independent estate agents, has floated in recent months.
Another rival, Yopa, has raised funding from investors including the publisher of the Daily Mail.
Sources said it was likely that both the eMoov and Tepilo brands would be retained if the merger took place.
Run by Russell Quirk, eMoov has been examining plans to float on the stock market for at least a year.

It raised about £9m in funding last summer which valued it at £40m, and its performance since then is difficult to deduce from publicly available information.
The company believes its hybrid model, which offers other property-related services as well as the ability to ?market homes on its platform, provides a route to future profitability.
The involvement in the proposed merger of Channel 4’s media-for-equity? fund will provide substantial advertising inventory to promote the eMoov and Tepilo brands.
Other tech start-ups such as Tootle, a digital car-buying service, have struck similar deals.
It was unclear on Thursday how big a stake the state-owned broadcaster would have in the newly merged group.
The proposed merger of eMoov and Tepilo comes during a slowdown in parts of the UK housing market.
Responding on Thursday to the Bank of England’s decision to maintain the base rate at 0.5%, Mr Quirk said it would “come as a welcome boost to a market that is acting slightly neurotically at the moment”.
While Purplebricks is by far the largest player in the online estate agents sector, ?its business model has begun to attract greater scrutiny from critics.
In March, it sold an 11.5% stake to the German media group Axel Springer for about £125m, and said it would use the funds to expand into new markets.

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Neither eMoov nor Tepilo could be reached for comment on their merger talks.
A Channel 4 spokesman declined to comment.

Source: SKY