Zoopla to be sold to US technology funds company

There's been a shock announcement that ZPG - operator of Zoopla, PrimeLocation and Hometrack, as well as uSwitch - has accepted a £2.2 billion offer to be acquired by a technology fund company, Bidco.

Bidco is a wholly-owned indirect subsidiary of funds managed by Silver Lake, which describes itself as "the world's leading investment firm focused on technology and technology-enabled businesses, with around $39 billion in assets under management."

Silver Lake says it "acts as a strategic participant in the technology industry, with an unparalleled network of relationships built over nearly two decades and a portfolio of market-leading technology companies that, in aggregate, generate over $170 billion of annual revenue and employ over 340,000 people."

ZPG's announcement to the London Stock Exchange this morning reads:

RECOMMENDED CASH ACQUISITION

of

ZPG Plc ("ZPG") 

by 

Zephyr Bidco Limited ("Bidco")
a wholly-owned indirect subsidiary of funds managed by
Silver Lake Management Company V, LLC ("Silver Lake")

Summary

·            The boards of Bidco and ZPG are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of ZPG by Bidco. The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.

·            Under the terms of the Acquisition, Scheme Shareholders shall be entitled to receive:

for each Scheme Share:                 490 pence in cash

·            The Acquisition represents an attractive premium of approximately:

o  43 per cent. to the volume weighted average price per ZPG Share of 343.0 pence for the three month period ended 10 May 2018 (being the latest practicable date prior to publication of this Announcement);

o  38 per cent. to the volume weighted average price per ZPG Share of 354.7 pence for the one month period ended 10 May 2018 (being the latest practicable date prior to publication of this Announcement);

o  31 per cent. to the closing price per ZPG Share of 375.2 pence on 10 May 2018 (being the latest practicable date prior to publication of this Announcement); and

o  24 per cent. to the all-time high closing price per ZPG Share of 394.0 pence on 7 March 2017.

·            The Acquisition values the entire issued ordinary share capital of ZPG at approximately £2.2 billion on a fully diluted basis.

·            Bidco has received an irrevocable undertaking from DMGZ (being a group company of Daily Mail and General Trust plc and ZPG's largest shareholder) to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in respect of its entire beneficial holding of ZPG Shares.

·            If any dividend or other distribution is authorised, declared, made or paid in respect of ZPG Shares on or after the date of this Announcement, Bidco reserves the right to reduce the Acquisition Price by the aggregate amount of such dividend or other distribution.

Information on ZPG

·            ZPG owns and operates some of the UK's most trusted digital brands that help empower smarter property and household decisions, including Zoopla, uSwitch, Money, PrimeLocation and SmartNewHomes. ZPG is also one of the leading residential property data and software providers with a range of products including Hometrack, Calcasa, TechnicWeb, Ravensworth, Alto, Jupix, ExpertAgent, PropertyFile and MoveIT. ZPG's websites and apps attract over 50 million visits per month and over 25,000 business partners use our services. ZPG was founded in 2007 and has a highly experienced management team, led by Founder & CEO, Alex Chesterman OBE.

·            Over the latest financial year, ZPG reported that it has made significant progress towards its mission of being the platform of choice for consumers and partners engaged in property and household decisions. Its audience continued to grow and remains highly engaged with a record 648 million visits to its websites, of which 72% were via mobile devices. ZPG continued to attract a focused, transaction-ready audience to the uSwitch website with account sign-ups increasing by 60% to 1.9 million at the end of the last financial year. In addition, uSwitch's mobile app won numerous awards during the period including 'Most innovative use of mobile' and 'Best app' at the MOMA Awards and 'Best use of mobile' at the DADI Awards. The cross-sell opportunity to ZPG's property partners has also been significantly enhanced through the acquisitions of TechnicWeb, Hometrack, ExpertAgent, Ravensworth and PSG. ZPG now offers best-in-class marketing, software and data services to its partners.

ZPG recommendation

·            The ZPG Directors, who have been so advised by Credit Suisse and Goldman Sachs as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their advice to the ZPG Directors, Credit Suisse and Goldman Sachs have taken into account the commercial assessments of the ZPG Directors.

·            Accordingly, the ZPG Directors intend to recommend unanimously that ZPG Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting as the ZPG Directors have irrevocably undertaken to do in respect of their own beneficial holdings of 5,097,583 ZPG Shares representing, in aggregate, approximately 1.16 per cent. of the ordinary share capital of ZPG in issue on 10 May 2018 (being the latest practicable date prior to this Announcement).

Irrevocable undertakings

·            Bidco has received an irrevocable undertaking from DMGZ (being a group company of Daily Mail and General Trust plc and ZPG's largest shareholder) to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in respect of its entire beneficial holding of 130,953,293 ZPG Shares, representing approximately 29.87 per cent. of ZPG's issued ordinary share capital at close of business on 10 May 2018 (being the latest practicable date prior to publication of this Announcement).

·            Bidco has also received irrevocable undertakings from each of the ZPG Directors to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in respect of their aggregate holding of 5,097,583 ZPG Shares, representing approximately 1.16 per cent. of ZPG's issued ordinary share capital at close of business on 10 May 2018 (being the latest practicable date prior to publication of this Announcement).

·            Bidco has therefore received irrevocable undertakings in respect of a total of 136,050,876 ZPG Shares representing, in aggregate, approximately 31.03 per cent. of ZPG's ordinary share capital in issue on 10 May 2018 (being the latest practicable date prior to this Announcement).

Information on Bidco

·            Bidco is a wholly-owned indirect subsidiary of funds managed by Silver Lake. Silver Lake is the world's leading investment firm focused on technology and technology-enabled businesses, with around $39 billion in assets under management.  Silver Lake acts as a strategic participant in the technology industry, with an unparalleled network of relationships built over nearly two decades and a portfolio of market-leading technology companies that, in aggregate, generate over $170 billion of annual revenue and employ over 340,000 people.

·            Each of Westhorpe and PSP will subscribe for a minority indirect interest in Bidco. Other potential investors may take indirect minority interests in Bidco during the offer period.

Timetable and Conditions

·            The Acquisition shall be put to ZPG Shareholders at the Court Meeting and at the General Meeting. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted. In addition, a special resolution implementing the Scheme must be passed by ZPG Shareholders representing at least 75 per cent. of votes cast at the General Meeting.

·            The Acquisition is subject to the further conditions and terms set out in Appendix I to this Announcement, including the receipt of merger control approval from the European Commission and the FCA having approved (or being treated as having approved) the acquisition of the control of ZPG. It is expected that the Scheme will become effective as soon as practicable, anticipated to be during the third quarter of 2018.

·            The Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and the General Meeting shall be published as soon as practicable. The Court Meeting and the General Meeting are expected to be held on or around 18 June 2018.

·            ZPG expects to publish its results for the half year ended 31 March 2018 at 7.00 a.m. on 23 May 2018.

Commenting on the Acquisition, Alex Chesterman, Founder & CEO of ZPG, said:

"Silver Lake is the global leader in technology investing and I am firmly of the belief that ZPG will benefit from their technology expertise and global network which will help accelerate our growth. In 2008, we transformed the property portal landscape with the introduction of a highly differentiated proposition providing data and delivering transparency to empower consumers to make smarter property decisions. Since its IPO in 2014, ZPG has evolved and diversified as we have made significant progress in becoming the platform of choice for consumers and partners engaged in property and household decisions. The terms of the Acquisition represent an attractive premium that recognises the quality of ZPG's businesses and the strength of its future prospects and allows shareholders to realise today in cash the potential future value of their holdings. I am very excited about the opportunity this offers to our employees, customers and partners as we move to the next stage of ZPG's development and growth."

Commenting on the Acquisition, Simon Patterson, Managing Director, Silver Lake, said:

"ZPG is a great growth technology company. It has established strong positions in property classifieds, home and financial services markets by innovating in product and marketing. We are delighted to partner with Alex Chesterman, one of Europe's leading and most accomplished technology entrepreneurs, to invest in ZPG's continued growth."