NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

                                                                                                                                  19 October 2017

Possible Merger Offer with The Property Franchise Group plc ("TPFG")

Belvoir Lettings plc ("Belvoir") announces that it has made an approach to TPFG regarding a possible merger with TPFG (together the "Enlarged Group").  As described further below, such merger would involve TPFG's shareholders receiving a combination of new ordinary shares in Belvoir and cash, funded by proposed new Belvoir bank facilities (the "Possible Merger Offer"). 

The Belvoir directors consider that the combination of TPFG and Belvoir would be in the best long term interests of both companies and their respective shareholders.

The strong preference of Belvoir is to implement the Possible Merger Offer on a recommended basis. The TPFG board has however informed Belvoir that that they do not believe this to be an opportune time to entertain offers or a merger for TPFG.

The Belvoir board are disappointed that the TPFG board have declined to enter into a dialogue, not least because they had previously indicated a willingness to engage with Belvoir in this regard and also given the strategic rationale for the Possible Merger Offer outlined below.

The Belvoir board strongly believe that now is exactly the time for such industry consolidation and that a more broadly based multi franchise group will be better positioned to leverage the opportunities in the sector and that the shareholders of the respective companies are looking for such leadership. The Belvoir board believes that the franchise-facing operations of Belvoir and TPFG will remain largely unchanged.

Given the above, the Belvoir board has decided to publicise the terms of its Proposed Merger Offer to facilitate direct discussions with the shareholders of TPFG and Belvoir.

Key terms of the Possible Merger Offer

Belvoir envisages that the Possible Merger Offer, the terms of which have been presented to the board of TPFG, would be achieved through a merger of Belvoir and TPFG and TPFG shareholders would be entitled to receive a combination of new ordinary shares in Belvoir and cash.  Such cash payment would be limited to a maximum of 52.20 pence per TPFG ordinary share and provide TPFG shareholders with a partial liquidity event.

Assuming a maximum cash payment of 52.20 pence per TPFG ordinary share is made, under the terms of the Possible Merger Offer TPFG Shareholders would receive:

0.7150 Belvoir shares and 52.20 pence in cash in exchange for each TPFG ordinary share.

Based on the closing mid-market price of a Belvoir share of 109.5 pence on 18 October 2017 (being the last business day prior to this announcement) this implies a valuation of (i) 130.5 pence for each TPFG ordinary share and (ii) £33.7 million for the current issued ordinary share capital of TPFG.

Furthermore, based on (i) the above share exchange ratio, which is derived from the closing mid-market prices of each of Belvoir and TPFG shares on 18 October 2017 (being the last business day prior to this announcement) and a maximum cash payment of 52.20 pence per TPFG ordinary share, and (ii) assuming 25,822,750 TPFG shares in issue at the date of this announcement, TPFG's shareholders would hold approximately 34.6 per cent. of the Enlarged Group.

The announcement and terms of any Possible Merger Offer are subject to the section headed Pre-Conditions and Reservations set out below.

Rationale for a combination of Belvoir and TPFG

The Proposed Merger Offer would create a UK property franchise group with some 683 outlets and 108,000 tenanted managed properties. With the changing dynamics in the industry, the combination of TPFG and Belvoir would, in the opinion of the Belvoir board, cement a more robust market position for the Enlarged Group.

Given the high degree of similarity between Belvoir and TPFG, the proposed merger creates the opportunity to:

·      enhance scale with a step-change through 683 outlets providing greater geographic coverage across the UK;

·      enhance the prospects for organic growth whilst in parallel presenting over time increasing opportunities for operational synergies and efficiencies (particularly in relation to the central administrative functions); and

·      create a company which can continue to drive the industry consolidation, and with an enlarged platform that would attract the best talent in our industry to help our franchisees develop their business at a faster pace.

With an increased market capitalisation, the Enlarged Group would enjoy an enhanced profile and greater liquidity. As a result, the Belvoir directors believe that it should become attractive to a broader range of institutional investors.

Management of the Enlarged Group

Belvoir believe it is vital for the success of the Enlarged Group that the Belvoir management team, led by the Belvoir CEO Dorian Gonsalves, remain together and are firmly of the view that they should drive the growth of the Enlarged Group.

Accordingly, Belvoir propose that the board of directors of the Enlarged Group would be constituted as follows:

·       Mike Goddard, current Chairman of Belvoir, would be Chairman of the Enlarged Group

·       Richard Martin, current Chairman of TPFG, would be offered the role of Non-executive Deputy Chairman of the Enlarged Group

·       Dorian Gonsalves, current Chief Executive Officer of Belvoir, would be Chief Executive Officer of the Enlarged Group

·       Louise George, current Chief Financial Officer of Belvoir, would be Chief Financial Officer of the Enlarged Group.

Financing of Possible Merger Offer

In relation to the cash element of the Possible Merger Offer outlined above, Belvoir have agreed indicative terms for a new revolving credit facility with a major UK lending bank, The Belvoir board believe that the use of such a facility will provide the Enlarged Group with an efficient capital structure, allowing annual reductions in borrowings whilst also providing for the continuity of a progressive dividend policy.

About Belvoir

Founded in 1995 and listed on AIM in 2012, Belvoir operates a nationwide property franchise group with 300 offices across four brands offering a range of specialist services in property rental, property management, residential lettings, buy to let, property sales and property-related financial services. With its Central Office in Grantham, Lincolnshire, Belvoir manages 58,000 properties and reported revenue of £9.9 million in 2016.

About TPFG

TPFG operates a property franchise business managing 50,000 properties through over 370 offices and six franchise brands: Martin & Co, CJ Hole, Parkers, Ellis & Co, EweMove and Whitegates.  TPFG reported revenues of £8.3 million, EBITDA (before exceptional costs) of £3.9 million and profit before tax of £3.2 million for the year ended 31 December 2016.  For the six months ended 30 June 2017, TPFG reported a profit before tax of £2.1 million on total revenues of £4.7 million and net assets of £12.9 million.

Pre-conditions and reservations

This announcement does not amount to a firm intention by Belvoir to make an offer for TPFG and, accordingly, there can be no certainty that any offer for TPFG will be made by Belvoir even if the pre-conditions set out below are satisfied or waived.

The announcement by Belvoir of a firm intention to make an offer for TPFG under Rule 2.7 of the Code would be subject to certain customary pre-conditions (which, in accordance with Rule 2.5(c)(i) of the Code may be waived in whole or in part by Belvoir):

1)   satisfactory completion of confirmatory due diligence on TPFG, including appropriate access to senior management;

2)   the directors of TPFG providing a unanimous and unqualified recommendation and the provision of irrevocable undertakings on terms satisfactory to Belvoir in favour of the transaction from the directors of TPFG (and their connected persons) who are also shareholders; and

3)   Belvoir finalising committed debt financing for the cash element of the Possible Merger Offer.

Belvoir reserves the right to vary the form and/or mix of the consideration referred to in this announcement.

In addition, pursuant to Rule 2.5 of the Code, Belvoir reserves the right to set aside the financial terms referred to in this announcement and/or at any time to make an offer or a merger proposal on less favourable terms, in the following circumstances:

1)   with the recommendation or consent of the board of TPFG;

2)   if a third party announces a firm intention to make an offer for TPFG; or

3)   if TPFG announces a whitewash proposal (for the purposes of Note 1 of the Notes on Dispensations from Rule 9 of the Code) or a reverse takeover.

Belvoir reserves the right to reduce the Possible Merger Offer consideration by the amount of any dividend (or other distribution) which is paid or becomes payable by TPFG to its shareholders following the date of this announcement.

Rule 2.6(a) of the Code requires that Belvoir, by no later than 5.00 p.m. on 16 November 2017, being the 28th day following the date of this announcement, either announces a firm intention to make an offer for TPFG in accordance with Rule 2.7 of the Code or announces that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Takeover Panel, in accordance with Rule 2.6(c) of the Code.

Belvoir will make a further announcement in due course.

The person responsible for arranging release of this announcement on behalf of Belvoir is Louise George, Chief Financial Officer.

Enquiries:

Important information

This announcement is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law or regulation and therefore any person who comes into possession of this announcement should inform themselves about, and comply with, such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws or regulations of any such relevant jurisdiction.

Cantor Fitzgerald Europe, which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cantor Fitzgerald Europe or for providing advice in relation to the contents of this announcement, or any other matters referred to in this announcement.

Rule 2.9 of the Code

Pursuant to Rule 2.9 of the Code, Belvoir confirms that, as at the close of business of 18 October 2017, Belvoir had 34,938,606 ordinary shares of 1 pence each in issue and admitted to trading on AIM and that Belvoir does not hold any shares in treasury. The International Securities Identification Number for Belvoir's ordinary shares is GB00B4QY1P51.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for; any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3. Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be made available on the Company's website www.belvoirlettingsplc.com by no later than 12 noon on 20 October 2017. For the avoidance of doubt, the content of the website referred to above is not incorporated into and does not form part of this announcement.

Forward-looking statements

This announcement may contain "forward-looking statements" relating to each of TPFG, Belvoir and/or the Enlarged Group and the business sectors in which they operate. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates", "forecast", "plan" and "project" or similar expressions identify forward-looking statements. Such statements reflect Belvoir's current views with respect to future events and are subject to risks, assumptions and uncertainties that could cause the actual results to differ materially from those expressed or implied in the forward-looking statements. Many of these risks, assumptions and uncertainties relate to factors that are beyond Belvoir's abilities to control or estimate precisely, such as future market conditions, changes in general economic and business conditions and the behaviour of other market participants. Belvoir cannot give any assurance that the forward-looking statements will prove to have been correct. The reader should not, therefore, place undue reliance on these forward-looking statements, which speak only as of the date of this announcement. Belvoir does not undertake any obligation to update or revise publicly any of the forward-looking statements set out in this announcement, whether as a result of new information, future events or otherwise, except to the extent legally required.