Back in November, we told readers about the merits of Belvoir, and argued the market had undervalued an estate agency franchise business primed for growth. In a twist we did not see coming, fellow estate agency franchise business The Property Franchise Group (TPFG) had the same thought process. So, in January, it snapped up Belvoir in an all-share deal (and at a 16 per cent premium to its November price).
Tip style
Growth
Risk rating
Medium
Timescale
Long Term
Bull points
- Merger offers potential
- Should benefit from housing market recovery
- Diversified revenue streams
- Growth through downturn
Bear points
- Exposed to cyclicality
- Franchise model could present conflict
That fundamentally changes our original investment case. Shareholders in Belvoir could use this opportunity to exit and reinvest elsewhere, but we see value in keeping their new shares, or even doubling down. In TPFG's case, bigger really looks to be better.