ZPG shares rocket 30% on news of sale to US tech firm

ZPG shares have rocketed up in value by 30 per cent this morning on the back of a £2.2 billion bid to buy the group from US tech investment firm Silver Lake.

Other portal shares have also risen this morning - Rightmove by around 5.5 per cent and OnTheMarket by about 7.5 per cent.

Silver Lake, through its company Bidco, is paying £2.2bn for ZPG, including its Zoopla, PrimeLocation and SmartNewHomes websites, its back-office agency support services and uSwitch, the utility comparison website.

The deal was agreed with the Daily Mail and General Trust which holds a stake approaching 30 per cent in ZPG. Investors will receive 490p a share - almost a third higher than its closing price yesterday. 

It has also now emerged that Westhorpe, a subsidiary of a Singaporean sovereign wealth fund GIC, and Canadian pension fund PSP will also take a minority stake by co-investing in ZPG with Silver Lake.

Analysts have been reacting to today’s news, which may be a pivotal moment in reshaping British property portals and how they are owned - and how they raise funds from agents.

Nick Jones, partner and head of technology at Cavendish Corporate Finance, a mergers and acquisitions advisory firm, says: “Silver Lake Private Equity’s acquisition of Zoopla’s owner ZPG is a strategic move by the PE firm, primarily to gain data flows and property portals which have become increasingly important in a sluggish housing market.”

He says the acquisition provides Silver Lake with traditional high street operators such as Foxtons seeing slow sales, “we expect to see challenger property groups, offering greatly differentiated proposition providing data and providing transparency to enable consumers to make more intelligent property decisions, to begin taking a much bigger share of the market.”

Ian Whittaker, an analyst at Liberum, has raised the possibility of a counter-bid although it’s unclear whether this would succeed given the terms outlined by ZPG and DMGT this morning. 

"The question now is whether there is a counter-bid. If there is one, we think the most likely candidate is Axel Springer, which has a collection of online property classified assets throughout assets but nothing in the UK," Whittaker told the BBC.

A statement this afternoon from Angus Grierson, managing director of LGB Corporate Finance, says: "As the estate-agent led business model continues to stumble, the move will help Silver Lake combine its digital know-how of buying analytics firms to exploit the technological  innovation that is rapidly permeating every aspect of UK mortgage lending.

"Zoopla and its larger competitor Rightmove have fundamentally disrupted the UK estate agency market and now occupy a pivotal position in the buying and selling process. This is leading to whole of market data insights and increasing pricing power that could be directed at estate agents or vendors directly.  It will also facilitate the cross-marketing of related products and services.”

Around other media, Barclays is quoted as saying the sale is “a clear positive” especially for media and events group DMGT, which is recouping around 14 times the cost of the investment.