Two of Britain’s biggest estate agency groups are in talks over a possible £470m merger that would bring together well-known brands such as Hamptons International and Your Move.

A combination of Countrywide and LSL would create a company with about 14,000 employees and 1,000 estate agent branches. News of the talks, which are in early stages but thought to be serious, sparked fears that the tie-up would lead to scores of branch closures and job losses.

Countrywide is the UK’s largest listed estate agent group by branches, and sells and rents properties through 60 high street brands including Hamptons International, Bairstow Eves and Gascoigne-Pees.

When Countrywide floated in March 2013 amid a buoyant housing market, it was worth £750m. Since then its market value has shrunk to £111m – less than a third of LSL’s £360m value – as it has struggled with mounting losses and a heavy debt burden in recent years.

Countrywide has more than 850 branches across the UK and employs 9,500 people. It started closing outlets a year ago and has reportedly shut about 250, and recently announced the £38m sale of its commercial property arm Lambert Smith Hampton.

Its troubles prompted Countrywide’s founder, Harry Hill, to tweet in July that the “business is beyond salvation”, as he criticised its executive chairman Peter Long, who also used to chair Royal Mail. Long stepped up to executive chair at Countrywide in January 2018 after the company issued two profit warnings in three months and Alison Platt quit as chief executive.

LSL owns estate agency chains Your Move, Reeds Rains and the London brand Marsh & Parsons, and has about 4,200 employees and 360 branches. It shut 124 Your Move and Reeds Rains outlets last year with the loss of 460 jobs.

One industry analyst said: “These are two companies that are struggling. They’ve both got to restructure. They can cut out a lot of central costs by having one head office and combining IT systems.”

Countrywide has blamed Brexit for its malaise, and rival Foxtons has also suffered. Traditional estate agents are also under pressure from a recent breed of online estate agents such as Purplebricks, as well as longer-established property websites including Rightmove and Zoopla.

The Brexit vote in June 2016 led to a downturn in the housing market but there have been signs of a pickup in the past month as confidence has returned among buyers and sellers.

Countrywide confirmed it was in discussions with LSL regarding a “possible all-share combination” but said there could be no certainty an offer would ultimately be made.

LSL issued a similar statement, and said it “reserves the right to introduce other forms of consideration and/or vary the mix or composition of consideration of any offer”. The firm has to announce a firm intention to make an offer for Countrywide by 23 March.