Countrywide shares soared 41.4% on Monday after it announced that it was in talks with rival Connells about a potential takeover worth in the region of £82m.
Countrywide announced that the group had received an indicative bid of 250p per share by Connells Limited and are considering it.
“The approach is at an early stage and Connells Limited has indicated that any offer is conditional upon, amongst other things, completion of confirmatory due diligence and the recommendation of the board of Countrywide,” the company said.
Connells confirmed that it has made an indicative approach to Countrywide in relation to a possible all-cash offer for Countrywide, and is currently trying to “determine the feasibility of making a firm offer for Countrywide”.
At one point yesterday morning, Countrywide’s share price had jumped 57% to 228p on the back of the news, but it ended the day at 205p.
This approach by Connells comes eight months after LSL Property Services pulled out of takeover talks with Countrywide.
Countrywide is already the subject of a £90m bid from Alchemy.
Countrywide revealed last month that it would raise £90m via a private share placement of 10.3 million shares to Alchemy, a private equity fund and shareholder, while also seeking a new £75m loan from its existing lenders to be repaid over four years.
A significant portion of the new funds would be used by Countrywide to clear existing loans worth in the region of £91.9m.
However, the proposed transaction with Alchemy has been opposed by Catalist Partners, a significant shareholder in the company.
A potential deal with Alchemy remains a possibility, but has been put on hold. It was due to be voted on at the general meeting scheduled for 18 November, but in light of discussions with shareholders and the Connells approach the Countrywide board has postponed the meeting until further notice.
Yesterday’s statement from Countrywide said: “Countrywide shareholders should take no further action in connection with the proposed transaction, including the making of payments of application monies, and the submission of application forms, documents of title, proxy forms and voting instructions, until further notice.
“In the meantime, the board will continue to engage with its shareholders to examine all potential options to deliver a sustainable capital structure for the company and to maximise shareholder value.”
Comments (7)
Just saying…
Ric
JULY 12, 2019 AT 07:27#1
I am pretty certain my last post put CW shares as nothing to get excited about but a dead cert for a return. Not dividend!! just a buy and sell exercise.
10p plus within 12 months. Never the dizzy heights of yesteryear… but if you have a bit of cash to play with and forget about… I reckon the likes of CW are worth a punt.
#Woodford #RicsFundAdvice #NoIdea #JustAGuess #WatchingToMuchLoveISland #Hashtag or is it ##
Ric
If you had bought shares in July 2019 they were standing at around 5.45p .That was before consolidation of 1:50 so today’s equivalent is around 270p which is above Connells indicative offer today of 250p
Time to have bought was at the end of May this year when the SP was 60p
Shareholders looking at a multibagger if the Connells deal holds true
Problem is Ric start of this year they consolidated a load of 10p shares to make them worth circa 3.50
If people purchased at 10p they still will loose money.
I have no idea of what any of that actually means LOL… but I agree… mainly for the sake of someone NOT trying to explain why 250p is no better than 10p.
However, I am interested to know how anyone can think investing in Boomin makes sense!
I dont think Connells will buy CW. They are just checking how to wipe out CW completely in order to get further dominance. I just believe the CW brand is beyond repair just way too much debt especially with the pain to follow in the property market next year due to covid. If they do buy CW then I wish them all the best as they will save many jobs.
Disagree there PPITE.
Certainly the brand is in a bad state of repair but the individual brands under the umbrella going great guns with potential .
Connells might not be the only girl in town either
Unlikely to be posting an indicative offer just to look under the bonnet .What do they need to know from that exercise to gain dominace that perhaps CWD have signed up to long leases with onerous conditions on branches and some insurance claims.
CWD operate in many areas that Connells arent represented in any event and although could expand organicallly this is a once in a decade opportunity to take a quantum leap relatively cheaply.
Due diligence in these situations doesn’t come cheap .
The arithmetic speaks for itself.
The entry cost of Connells @ 250p per share +the netr debt in June less than £50m (falling) means under £150m for a company that despite the best efforts of ratcheting up millions of abortive costs still managed to turn in an operational profit of £7.9m in H1
“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
Warren Buffett
This looks like a very clever and well timed move by the mighty Connells who would rocket forward from 180 branches establishing a national network in one fell swoop at a bargain basement price .CWD shareholders can only wish they had made their move sometime ago
Another abortive fee bill incurred with the dance with Alchemy landing on the doorstep for this set of BODS who need to be consigned to history -fast before they do anymore damage
I should imagine that would be uppermost in Connells mind as they undertake due diligence God Bless David Livesey in CWD shareholder prayers before bed last night
Connells carried forward over £70m in the Tommy into this financial year and their branches have been going great guns now arriving at CWD whilst the party is in full swing with revenue arriving in bucketloads at the branches in October
With the backing of The Skipton who will be eyeing up CWD’s new avenues of financial services to sell product, finance is not a problem
In addition surveying services and a commercail property business to boot
Many of the brands sales offices within CWD umbrella fit in like a glove with no duplication with Connells Wales Scotland , The North ,Cornwall and Central London offices of John D Wood and Hamptons
Countrywide Scotland (11 branches )
Slater Hogg (35 branches)
Wales
John Francis (20)
The North
Beresford Adams incl Wales (27)
Bridgefords (87)
Entwhistle Green (42)
Blundells 18)
Clive Watkin (7)
Sutton Kersh (3)
Cornwall
Miller (24)
Stratton Creber (13)
+John D Wood and Hamptons in C London