Knight Frank and Bayleys Commence Discussions Regarding the Acquisition of McGrath Estate Agents

John McGrath has described the possible collaboration as "an ideal match."

In a statement released to the ASX earlier this week, McGrath disclosed that its board had unanimously endorsed a plan in which McGrath has engaged in a Scheme Implementation Deed with RPAA Holdings Pty Ltd, a company jointly owned by Knight Frank Australia Holdings Pty Ltd and BCL Aus Holdings Limited, a subsidiary of Bayley Corporation Limited.

What this entails is that Knight Frank and Bayleys have reached an agreement to acquire the entire share capital of McGrath through a scheme of arrangement.

In a statement to the ASX, it was clarified that the McGrath board, collectively holding or controlling approximately 48.1 per cent of issued McGrath shares, unanimously advises shareholders to vote in favor of the scheme. Approval from McGrath shareholders at a scheme meeting is required for the acquisition to proceed.

Should the scheme be enacted, McGrath will be removed from the ASX, with the implementation expected by June 30, 2024, pending fulfillment of all conditions.

Under the scheme, McGrath shareholders will be given the choice of receiving either $0.60 in cash per McGrath share or unlisted scrip consideration, or a combination of both.

John McGrath, the founder and CEO of McGrath, has disclosed his intention to opt for the unlisted scrip alternative for all his McGrath shares (approximately 23.3 per cent of all shares on issue). He plans to continue leading McGrath as CEO and managing director, with the backing of management, once the scheme is executed.

"I’m not going anywhere for the rest of my life."

Expressing enthusiasm about the potential collaboration with two renowned real estate brands, McGrath mentioned that the alignment would enable him to pursue his goal of making McGrath Australia’s premier real estate brand alongside the management team.

Describing the potential partnership as "a match made in heaven," McGrath expressed confidence that if the scheme proceeds, it will greatly benefit all stakeholders, particularly property sellers and renters who would gain access to global reach through Bayleys and Knight Frank.

McGrath emphasized his delight at receiving an offer from a consortium comprising Knight Frank, a leading global property firm with a strong residential real estate presence worldwide, and Bayleys, a top New Zealand full-service real estate agency.

He stressed the shared values and cultures among the parties, foreseeing the partnership as a positive development for the industry, McGrath agents and team members, franchise partners, and customers, who stand to benefit from the consortium’s global networks and real estate expertise in support of McGrath's vision and growth plans.

McGrath assured that operations would remain unaffected, stating that there would be no immediate changes to how the business is run. However, he anticipated a fruitful exchange of ideas as they collaborate closely with their partners.

James Patterson, CEO of Knight Frank Australia, also expressed excitement about the potential partnership, envisioning a leading position in residential and commercial real estate in Australia, providing comprehensive real estate services to clients and customers.

Similarly, Mike Bayley, managing director of Bayleys, sees the partnership as a collaboration between leading real estate companies, offering unprecedented global reach and value to clients across Australasia.

McGrath shareholders are not required to take action at present, but the board views the scheme as an excellent outcome, offering shareholders a significant premium to historical trading prices and providing certainty of value.

Chairman Peter Lewis believes that Knight Frank and Bayleys share a similar business ethos to McGrath, presenting a positive development for senior management and team members, who will continue to be led by John McGrath.

McGrath himself sees the partnership as ideal, given the proximity of Bayleys and the global presence of Knight Frank, offering extraordinary capabilities and international reach that are well-received by the team.

In conclusion, McGrath expressed his satisfaction with the partnership, stating, "I couldn’t think of two better partners to be involved with, to be quite frank."