The Agency Group Australia will acquire fast growing east coast real estate firm Top Level Real Estate Pty Ltd in a deal that will see Australia’s two leading disruptive, fast growing real estate agencies become one business.
The ASX-listed company (ASX:AU1) will acquire all Top Level shares held by the majority shareholders in Top Level Real Estate and offer to acquire all other Top Level shares from those shareholders other than the majority shareholders. for
Total consideration for the acquisition is 550 million AU1 shares.
The deal will unlock significant synergies with The Agency Group Australia to benefit from Top Level’s significant growth on the east coast.
Since launching in March 2017, Top Level has recruited 75 high-quality real estate agents with a further 27 agents confirmed to start. Top Level has also expanded to 9 office locations, with 3 proposed new locations.
Top Level has delivered $480 million in sales, $7.2 million in commissions, 267 settlements and 3,375 property managements since March.
Combined, The Agency’s East Coast and West Coast businesses will consist of 131 real estate agents, approximately 114 staff, 4,000 property managements. It has generated $31 million revenue in half year 2017.
This transaction provides an exciting opportunity for The Agency, its staff and shareholders, and further cements our position as the fastest growing disruptive real estate group in the country,” The Agency Group Australia Managing Director Paul Niardone said.
“Top Level, which has been trading as ‘The Agency’ on the east coast of Australia since launching in March this year, has established, with our support, a significant business in a short period of time, surpassing our recruitment and sales targets.
“Integration of these two businesses makes perfect sense, since both parties will be able to capitalise on the continuing success of The Agency brand, the rollout of the Sell Lease Property Brand while fully realising the efficiency benefits of working under the one ownership structure, Mr Niardone added.
Importantly, Mr Niardone also believes the revised acquisition structure which will see the total number of shares to be issued reduced by 416 million shares, removes a significant ‘overhang’ that would have existed under the original transaction structure.
“The removal of this overhang has been viewed positively in our discussions with corporate advisers and institutions,” he said.
“This is a good outcome for both existing Agency Group shareholders and Top Level shareholders, and ensures both groups are aligned to achieving sustainable shareholder value.
“Integration of these two businesses makes perfect sense, since both parties will be able to capitalise on the continuing success of The Agency brand, the rollout of the Sell Lease Property Brand while fully realising the efficiency benefits of working under the one ownership structure,” Mr Niardone concluded.
Once the Top Level transaction and proposed transaction with ServTech Global Holdings Ltd (ASX: SVT) is completed, The Agency Group will be the only national real estate company to have two national brands in the Australian market – replicating a strategy that has proven very effective in both the US and UK real estate markets.
Top Level CEO Matt Lahood will be appointed as an executive director of The Agency Group Australia with a Top Level nominated non-executive director to be appointed to The Agency Group Australia board.
Mr Lahood believes that by formally joining The Agency Group Australia, the Top Level team can significantly enhance and fast track its already impressive east coast offering and results to the benefit of the enlarged business.
“We are thrilled to be merging with The Agency Group Australia to become Australia’s leading disruptive, high growth real estate agency,” he said.
“I am highly confident this agreement will provide us with great scale and will create great leverage with our clients nationally.”
Todays amended option agreement replaces a previous option agreement announced in January 2017 where it entered into License Agreement and Option to acquire Top Level at any time on or before 30 January 2018.
The company has also launched a placement (on a pre-consolidation basis) to raise a minimum of A$10 million to assist in funding the acquisition.
The transaction requires shareholder approval.
Shares in The Agency have gained 0.4c, or 20%, to hit a high of 2.4c in morning trade on Monday.