McGrath Limited (ASX: MEA) (“McGrath”or the “Company”) today announced that its Board has unanimously approved a proposal, whereby McGrath has entered into a Scheme Implementation Deed with a consortium of Knight Frank  and Bayleys, under which the consortium has agreed to acquire 100% of the share capital of McGrath by way of scheme of arrangement.

Founder and Chief Executive Officer of McGrath, John McGrath intends to elect to receive the unlisted scrip alternative for all his McGrath shares (being, in aggregate, approximately 23.3% of the McGrath shares on issue).   

John McGrath will continue in his role as CEO and MD, supported by his management team, upon implementation of the Scheme.

Under the terms of the Scheme, McGrath shareholders will have the option to receive $0.60 cash per McGrath share, or an unlisted scrip alternative, or a combination of both.  

McGrath shareholders will also be entitled to a permitted dividend prior to implementation of the Scheme which will not reduce the Scheme consideration and is subject to the conditions outlined below.

The Board of McGrath, who in aggregate currently hold or control approximately 48.1% of the issued McGrath shares, unanimously recommends shareholders vote in favour of the Scheme, in the absence a superior proposal and subject to an Independent Expert concluding and continuing to conclude that the Scheme is fair and reasonable and in the best interests of McGrath shareholders.

The Scheme is subject to certain conditions, including approval by McGrath shareholders at a Scheme Meeting.

Subject to satisfaction of the conditions, implementation of the Scheme is expected to occur before 30 June 2024.  If the Scheme is implemented, McGrath will be delisted from the ASX

McGrath Founder and Chief Executive Officer, John McGrath said:“We are delighted to have received this offer from a consortium comprising a leading global property firm in Knight Frank, which has a strong residential real estate offering throughout the world, and leading New Zealand full-service real estate agency in Bayleys. Together we share common values and cultures and see the potential partnership with McGrath as a positive development for our industry, and for McGrath agents and team members, our franchise partners and customers, who will benefit from the Consortium’s global networks, access to high net worth clients and real estate expertise in support of our vision and growth plans. My role as CEO will continue and, if the Scheme is approved, I look forward to continuing to work with the great team at McGrath but also in taking advantage of the opportunities afforded by international partners Knight Frank and Bayleys”.

Mr McGrath added, “I’m incredibly excited at the possibility of partnering with two of the world’s great real estate brands, so I can continue my goal, alongside my management team, of making McGrath Australia’s leading real estate brand.” 

McGrath Chair, Peter Lewis, said:“In considering the merits of the Scheme, the Directors have been committed to acting in the best interests of shareholders. Our view is that the Scheme represents an excellent outcome for McGrath shareholders, customers, our agents and staff. The Scheme Consideration is at a significant premium to historical trading prices, offering McGrath shareholders with certainty of value and the opportunity to realise their investment in full for cash.

“It is pleasing to see that Knight Frank and Bayleys share a similar business ethos and approach to McGrath and I see this as a positive development for the McGrath senior management and team members who will continue to be led by its Founder and CEO John McGrath.”

Knight Frank Chief Executive Officer of Australia, James Patterson, said“We are excited at the prospect of Knight Frank and Bayleys potentially partnering with McGrath, which is a well-established residential property business with a wide reach within Australia.  Knight Frank has a world class global network with more than 125 years of experience. The acquisition would allow Knight Frank to have a leading position in Residential and Commercial real estate in Australia, creating a full service real estate capability to support and advise clients and customers. This partnership would see all brands operating as business as usual. Working together, these teams will create a powerful combination of local expertise with global reach, which will generate enormous opportunity for McGrath and its customers.”

Bayleys Managing Director, Mike Bayley, said:“Bayleys views the partnership with McGrath and Knight Frank as a collaboration of leading real estate companies servicing markets on both sides of the Tasman whilst providing unprecedented global reach. The ability to share ideas and innovations as well as systems and information will add considerable value to our clients across Australasia. Bayleys is the largest full service real estate organisation in New Zealand and has considerable expertise across the residential, commercial, and rural market sectors as well as in franchising. We believe that, as a consortium, Knight Frank and Bayleys are the best partners to ensure McGrath is well positioned to realise its long-term strategic objectives and capitalise on its next phase of growth.”

A Scheme Booklet containing information relating to the proposed acquisition under the Scheme, reasons for the McGrath directors’ recommendation, an Independent Expert report, and details of the Scheme meeting will be prepared and provided to the Australian Securities and Investments Commission for review, and subsequently sent to McGrath shareholders.

Updated 28 June 2024:

Knight Frank and Bayleys complete acquisition of McGrath and announce new board of directors Australia | The Real Estate Conversation