Countrywide, the estate agency group that owns Hamptons International and Gascoigne-Pees, has received a £82m takeover approach from its rival Connells.
Countrywide, the UK’s largest listed estate agent group with 731 branches, said it had received an indicative approach from Connells at 250p a share in cash, which would take it back into private ownership. Countrywide shares surged 48% to 214.8p on the news.
Connells, an estate agency group with nearly 600 branches that is a subsidiary of Skipton Building Society, said it had approached Countrywide’s board on 26 October and was scrutinising its books before deciding whether to make a firm offer.
It said: “The board of Countrywide has indicated that Countrywide is in urgent need of recapitalisation to reduce its net debt and lessen its exposure to its lenders. The board of Countrywide believes that, in the absence of a recapitalisation, Countrywide is unlikely to be able to execute its business strategy over the short and medium term and there is a risk that it could end up in administration, with Countrywide shareholders losing all or a substantial portion of their investment.”
Connells added that Countrywide needed a new management team and a strategy to turn around the business along with significant investment in its technology, network and people after years of mounting losses. Countrywide has debts of £91.9m and has been closing branches.
Countrywide sells and rents properties through 60 high street brands including Bairstow Eves and King & Chasemore. When the company floated on the stock market in March 2013, it was worth £750m. Connells’ 25 brands include Allen & Harris, Bagshaws Residential, Fox & Sons, and Barnard Marcus in London.
Countrywide said it was postponing a special meeting of shareholders, due to be held on 18 November, at which it would have sought approval for a rival move made by the private equity firm Alchemy last month.
Alchemy, a Countrywide shareholder with a 2% holding, proposed a £90m investment in return for a management shake-up, including the removal of the chairman, Peter Long, and the appointment of a new chief executive to replace Paul Creffield. Long would be replaced by Carl Leaver, a former senior executive at Marks & Spencer who previously ran the gambling group Gala Coral and the financial firm DeVere.
Connells said its offer would avoid the “significant costs and risks” associated with the Alchemy proposal.
The approach from Connells comes eight months after LSL Property Services, which owns Your Move, abandoned a planned all-share merger with Countrywide that would have brought together two of Britain’s biggest estate agency groups.