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Savills to buy Smiths Gore in £40million deal

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Land agency giant Savills plc has announced the proposed acquisition by Savills UK of rivals Smiths Gore.

The deal will see £40million paid over five years for the £30million turnover Smiths Gore business.

There has already been some controversy over the merger with the Scottish Tenant Farmers Association (STFA) voicing concerns over what it sees as an undue “concentration of land management.”

Founded in 1847, Smiths Gore has operated as a partnership with 532 staff, across 31 UK offices and 14 estate offices, all of whom will transfer into Savills’ Rural Energy and Projects (REP) division or its Country Residential Agency business.

Smiths Gore specialises in the management of rural property for private clients, institutions and the public sector. Savills regard this as complementing its existing rural business which is mainly focused on private client and charitable sectors together with transactional advice.

Savills UK executive director Philip Gready will continue to lead the UK REP division with Smiths Gore’s senior partner Andrew Harle joining the Savills UK board.

Philip Gready, executive director of Savills UK, said: “Today, rural estates are multi-million pound businesses which require highly skilled management across all sectors if they are to achieve their potential. Rural land, with some of the highest capital returns achieved over the past decade, has become a truly international commodity and the combined expertise of Savills and Smiths Gore will allow us to provide a full service offering to all our clients.”

The deal will see Savills pay £12.5million for the Smiths Gore business in the near future plus another £8.5million in respect of net current assets. A further £16million will be paid in three years time followed by £3million in five years depending on certain performance conditions being met.

Voicing his concerns over the deal, STFA chairman Christopher Nicholson said: “The bulk of Scotland’s landed estates will now be factored by just two firms – CKD Galbraith and Savills.

“This leaves Scotland with not only the most concentrated pattern of land ownership in Europe, but also the most concentrated pattern of land management. As any tenant on estates where resident factors have been replaced by agents from large national firms will know, the style of factoring is very different and by its nature can lead to increased disputes.

“This latest merger of land agency firms can only be worrying news for tenants in Scotland, and reinforces the need for a Tenant Farming Commissioner with statutory powers to be established at the earliest opportunity. Nor might it be good news for landlords with lack of competition leading to higher prices for land agency services.”

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