In a dramatic New Year’s Eve statement on the London Stock Exchange, Countrywide has agreed the terms of a recommended offer for the company by Connells.
Under the terms of the acquisition, each Countrywide shareholder will be entitled to receive 395 pence in cash for each share. This means Connells' initial £82m offer has been increased to around £230m.
All of Countrywide's lenders will be repaid in full and Connells will provide additional investment in Countrywide's technology, branch network and people, “stabilising and enhancing Countrywide's business for the benefit of its customers, employees and other stakeholders” according to the statement.
David Livesey, Connells Group chief executive, says: "Our revised offer of 395 pence per Countywide share provides shareholders with a 172 per cent. premium to the unaffected price, and has received strong shareholder support including by way of irrevocable undertakings from major Countrywide shareholders. We believe that the acquisition is a great deal for all stakeholders.
"Our primary motivation for the acquisition is to invest in and grow the Countrywide business. We believe that we have the right management team, strategy and investment firepower to work with the talented teams at Countrywide and lead Countrywide into a bright future."
And Countrywide’s acting non-executive chairman David Watson adds: "Following a thorough evaluation of options and extensive consultation with the company's major shareholders, we have been encouraged by their recognition of the need to put in place a sustainable capital structure and a willingness to support the company, which is a great business that has been constrained by too much debt.
"This significantly improved offer from Connells allows Countrywide shareholders to realise their investment in cash at a price that fairly values the opportunities and risks of the business. We are pleased to recommend this offer, which is supported by our major shareholders, and puts the company on a stronger footing, securing the future of the business, its customers and its employees."
Today’s statement also adds that a rival offer for Countrywide, made some weeks ago by private equity company Alchemy Partners, is now dead in the water: “The Countrywide board today confirms that it does not intend to pursue that proposal and has ended discussions with Alchemy Partners” says the announcement.
The acquisition by Connells - which Alchemy Partners at one time claimed may be subject to intervention by the Competition and Markets Authority - appears to have cleared that hurdle already.
The statement today says: “Connells believes that the proposed acquisition will not give rise to any competition concerns in any markets in which Connells and Countrywide operate and is confident that the CMA will concur with this view.
“Accordingly, the acquisition does not contain a specific condition requiring clearance from the CMA. Connells is also strongly of the view that the acquisition of Countrywide would not warrant any divestments and that there is no reasonable basis for the acquisition to be blocked. Moreover, Connells believes that its acquisition of Countrywide will enhance the value proposition for customers and will benefit consumers as a whole.”
Connells is owned by the Skipton Building Society and today’s lengthy statement also carries a series of commitments and aspirations in terms of how it sees the Countrywide agency and ancillary services network integrating with Connells'existing structure.
They are:
“Connells believes that a well-invested high street branch network, coupled with a diversified brand portfolio, will allow the combined business to provide an attractive offering to its customers.
“Connells also believes that the branch network of Countrywide is a key asset and intends to maintain and enhance Countrywide's current branding and service offering, while leveraging its own track record of positive investment in people and technology.
“Connells further believes that the enlarged Connells Group will provide exciting career opportunities for both Connells and Countrywide employees, and will have the potential to attract the best talent in the industry across all areas of expertise.
“Connells continues to be a driver of innovation in the UK real estate services sector, having made successful early investments in a number of technology-enabled firms such as Fixflo, Vibrant Energy, Zero Deposit Scheme and MIO.
“Its investments have allowed Connells to offer an increasingly attractive proposition to customers, while generating long term resources to further invest in its core businesses.
“Connells has a successful track record of integrating acquisitions and helping to develop the businesses that it has acquired.
“Notable acquisitions include Sequence, Sharman Quinney, Peter Alan, Burchell Edwards, Gascoigne Halman, Rook Matthews Sayer, The Asset Management Group and The New Homes Group, each of which has continued to thrive under Connells' ownership. Connells believes that it is well-positioned to be a long-term custodian of Countrywide, just as it has been for the numerous firms it has successfully acquired and grown over the last 18 years.”
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Probably for the best. Staff should be reassured that they will finally have a management team who know what they are doing leading them.
What about the duplication or close proximity of branches, former competitors. Will there be a shake up, with branch closures as a consequence?
Connells believes............that taking over Countrywide will enhance their standing? I'm not so sure.
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