Mortgages  

Merger of mortgage broker giants called off

Merger of mortgage broker giants called off

The merger between two mortgage broking giants has been called off after one of the companies pulled out of the deal.

Last month LSL Property Services and Countrywide confirmed they were in talks regarding a possible merger which would see the creation of a £470m company.

But today LSL, which is the parent company of mortgage brokers TMA Mortgage Club, Primis Mortgage Network, Embrace and Mortgage Gym, announced that it no longer intended to pursue the transaction.

Reasons for the LSL's withdrawal have not been made public but it comes as markets around the globe have slumped because of concerns about the spread of Covid-19.

In response to the announcement, Countrywide, which claims to be the UK's largest mortgage broker, said: "The board of Countrywide remains confident in the strength of the underlying business as an independent company.

"The company has seen a positive mood swing in public sentiment through the early part of 2020 which we have seen reflected in a strong start in agreed sales which are ahead of the board's expectations through February 2020. 

"Whilst we have seen some softening in recent days as a result of Covid-19, it is too early to assess that impact."

Although Countrywide is the larger of the two companies, it would have been the junior partner in the deal because it has a smaller market cap.

Countrywide saw its income for 2019 fall to £498m amid what it described as a "challenging market". The company is currently implementing a "back to basics" turnaround plan.

The announcement that LSL was pulling out of the deal led to Countrywide's share price falling by 51 per cent, while LSL's fell by 27 per cent.

damian.fantato@ft.com