Countrywide has this morning rejected Connells’ offer to acquire the group.
Connells recently announced that it had completed its due diligence work on Countrywide and confirmed its offer of 250p cash per share, valuing Countrywide at around £82m.
The group was prepared to make a firm offer and was awaiting Countrywide board recommendation and shareholder support.
But a trading statement issued by Countrywide this morning said that the “board has unanimously rejected the possible cash offer”.
The board has decided instead to continue with Alchemy’s revised proposal.
But Connells has responded by stating that it is “considering its options regarding the possible all-cash offer for Countrywide it had announced on 9 November 2020 and re-confirmed on 23 November 2020”.
The company “urges Countrywide shareholders to take no action in relation to the possible revised Alchemy proposal. A further announcement will be made in due course.”
You can read the statements from Countrywide and Connells below:
On 24 November 2020, Countrywide plc (“Countrywide” or the “Company”) announced that the Board was continuing to engage with all major shareholders to explore all potential options to deliver a sustainable capital structure for the Company and to maximise shareholder value, including (but not limited to): (i) a capital raise to be underwritten by Alchemy Partners on amended terms; (ii) the indicative approach received from Connells Limited (“Connells”) to acquire the entire issued and to be issued share capital of the Company, in cash, at a price of 250 pence per Countrywide share (the “Possible Cash Offer”), as announced on 9 November; and (iii) a capital raise from existing shareholders of the Company.
Following these discussions, which are ongoing, the Company is today updating shareholders on the following:
Revised Alchemy Proposal
Alchemy Partners has recently submitted to the Countrywide Board an indicative revised proposal for an equity raising fully underwritten by Alchemy Partners (the “Revised Alchemy Proposal”), the key terms of which are as follows:
(a) an opportunity for existing shareholders to sell their Countrywide shares at 250 pence per share to be fully funded by Alchemy Partners (the “Possible Alchemy Offer”), which is pre-conditional upon commitments from certain shareholders not to accept the Possible Alchemy Offer;
(b) a recapitalisation of the Company of approximately £70 million to be fully underwritten by Alchemy Partners, comprising:
(i) a firm placing of approximately 15.6 million ordinary shares to Alchemy Partners for an issue price of 225 pence per share, generating gross proceeds of approximately £35 million (the “Firm Placing”); and
(ii) an open offer of approximately 35 million ordinary shares at an issue price of 100 pence per share which would be implemented following completion of the Possible Alchemy Offer and the Firm Placing (the “Open Offer”), such that the shares acquired by Alchemy Partners pursuant to the Possible Alchemy Offer and the Firm Placing would be entitled to participate in the Open Offer; and
(c) the transfer of the Company’s listing on the Official List from the Premium Listing segment to the Standard Listing segment.
The Revised Alchemy Proposal would enable shareholders who wish to realise their investment in Countrywide to sell their shares to Alchemy Partners, whilst also enabling those shareholders who continue to believe in the potential of Countrywide to retain their existing stake and, if they choose, invest further capital.
Alchemy Partners has informed the Board that the Revised Alchemy Proposal is conditional upon, amongst other things: (i) the negotiation and execution of a revised Subscription Agreement between Countrywide and Alchemy Partners and the support of the Board; (ii) there being sufficient support in terms satisfactory to Alchemy Partners from Countrywide shareholders to approve the Revised Alchemy Proposal at a general meeting and give irrevocable commitments regarding participation in the Possible Alchemy Offer and the Open Offer, such that Alchemy Partners would control a majority of Countrywide’s shares once the Revised Alchemy Proposal has completed; and (iii) Alchemy Partners reaching a revised agreement with Countrywide’s lenders which results in a smaller repayment than the £50 million repayment previously proposed.
The Revised Alchemy Proposal is subject to further consideration by the Board, and the Board and Alchemy Partners will discuss the terms of the Revised Alchemy Proposal with all major shareholders.
Rejection of Possible Cash Offer by Connells Limited
On 23 November 2020, Connells announced that its due diligence work on Countrywide had been completed, that its offer price was re-confirmed at 250 pence per share in cash, and that the making of a firm offer was subject only to the recommendation of the Countrywide Board and shareholder support.
Following a thorough review of the Possible Cash Offer with its advisers, the Board has unanimously rejected the Possible Cash Offer.
Ongoing discussions
The Board remains committed to engaging with all major shareholders to examine all potential options, including (but not limited to) the Revised Alchemy Proposal and a capital raise from existing shareholders of the Company.
A further announcement will be made as and when appropriate.
Connells has responded to the Countrywide statement this morning.
It states: “The board of Connells Limited notes the announcement made earlier today by Countrywide plc of a possible and still highly conditional revised transaction involving Alchemy Partners. Connells is considering its options regarding the possible all-cash offer for Countrywide it had announced on 9 November 2020 and re-confirmed on 23 November 2020 and urges Countrywide shareholders to take no action in relation to the Possible Revised Alchemy Proposal. A further announcement will be made in due course.”
Comments (19)
They even managed to crank up £3.1m of abortive costs (professional feesfest) in a short space of time with the failed merger with LSL which was never going to happen unless the Dane completed the purchase of LSH .Further abortive costs incurred there which are still continuing as they are currently in court chasing him for money .
A quick glance at his UK companies looks like they will be left with more abortive costs The current corporate action taking place with the arrival of Alchemy even more costs .
You have to feel sorry for all the neggies banging in their £2k fee accounts watching it disappear down a black hole at corporate HQ
As a shareholder i am furious.
This was the only chance of reclaiming part of my investment.
Its clearly the best deal. Doing a deal with Alchemy will further dilute my shares and no doubt they will break up the company.
If it’s 250p per share that you want, the market for CWD shares is already at 246p this morning, and rising.
Smile The revised bid from Alchemy unlikely to cut any ice with the majority of shareholders
They made a cardinal error first time around the houses assuming that the shareholders would be as gullible as the BODS.
Alchemy deals with distressed companies. That should be a big enough clue. People see Countrywide as Estate Agency but when you consider it was Britains largest mortgage broker and the data that holds, (re-mortgage potential) Britains largest Letting agent with 85,000 management producing a guaranteed monthly revenue stream, the Surveying arm that is the leader in its field and used by most mortgage lenders , a successful B2B Division and two excellent premium Brands in Hamptons & JF Wood. Dare I suggest the Golden Nugget isn’t the expensive to run Branch network of Estate Agency?
Connells can expand their operation whilst rationalsing the number of Branches.
The long suffering shareholders must be divided between those that want some immediate return and leave and those who can afford to wait in the hope of achieving improved shareholder value.
What mustn’t however be allowed to happen is a continued debacle as seen with the sale of LSH and now 2 spurned approaches from competitors.
If Countrywide are to move forward, they need to quickly demonstrate clear and decisive management with a workable solution.
Distressed .Herein lies the rub .Alchemy have arrived too late on the scene .Rollback a few months when the sp was below 100p and the situation looked dire they might have stood half a chance trying to pinch CWD .
Their bid unlikely to be supported by Hoskings and Paterson and many small shareholders. However despite the best efforts of the incumbent BODS to derail the train those at the coalface have been packing the sales in and valuation services have been on overtime
So distressed they ain’t just the thorny problem of sorting out the medium term financing next year where a capital raise of £20/30m not £70m will be more than sufficent to secure .
The solution is easily workable now the makeweights are leaving if replaced by some time served property directors and offering staff discounted shares to give them some skin in the game
Connells will need to hit back with a knockout punch to have any chance of success and that likely needs to be well North of 300p
Maybe they might be willing to hive off Hamptons to Paterson and Hoskings to get them onside .The permatations are endless
Don’t discount Paterson with investors in tow or A N Other late entrant to spoil the party .
Without wishing in anyway to belittle the efforts of the troops or those at the coal face, they can already participate buying shares. Unfortunately the saving schemes originally offered where they were given 3 shares for the price of 1, resulted in mass losses for them. Those that bought £150 of shares each month were rewarded after 5 years with a net return of around £293.00.
The ensuing scheme where you saved money and bought shares at a discounted rate has faired little better. The original discounted share price as £1.37
If the share price had been the key determinant, Countrywide would have folded years ago. Look at the history of the company. There seems to be a myth that Countrywide has been a hive of profit. It’s present guise was borne out of a buyout for £1 back in 2008 owing millions. It has struggled to make any continual profit for the past decade.
Ironically, although revenues have fallen (HI down by 28% on 2019), the revenue stream in relation to the company value is good. Revenues up by 30% on H1 will still leave total revenues down on 2019. (Revenues were stronger in H2 2019). The Barn really was empty.
Total debt 2017 was a reported £177m., with £91m due in the short term.
Hoskings may own 13.53% of the company but other major investors have either sold out or significantly reduced their holding, no doubt seeing the increased share price as some small mitigation for previous losses.
There have been a net sell off of around 18% of the company by the major investors in the past 60 days.
I agree that there are more twists and turns to come but if £20m [about two weeks worth of income) could solve their debt problems, Countrywide in the words of Cornell’s would not “be on the verge of entering administration”
“Be on the verge of entering administration ” Well in the words of Mandy Rice-Davies Connells would say that wouldn’t they anything arriving as the cavalry on their white chargers to the rescue
Apart from a few rivets being blown on the loan covenants which is mainly due to the fact 12 months ago they agreed an amended credit facility on the strength of the monies coming in from the sale of LSH they are far from facing administration .The banks have got bigger fish to fry .
The history of the company is a series of self inflicted wounds mistakes by an inept set of BODS Writing off goodwill before the ink was dry on some of the buyout cheques . The appointment of unsuitable senior executives and they even managed to incur multi million £ losses buying in shares when the sp was in freefall .
Hardly surprising they made any profit in the last 5 years
Hoskings have recently increased their stake and now hold over 20% and Paterson over 10% so Alchemy need to get one or both on board to have any chance of securing the 75% they need
They need to pull a rabbit out of the hat
Agreed with HillOfWad
entering administration is not in the frame currently. Income strong and a grand stand income month to end in December with pre Xmas exchanges. Take it from someone who knows the figures – they are very strong.
think about it – if a company was about to enter administration you’d wait to buy them for knock down price in a pre pack deal, not put up the cash before at a higher amount. Connells comments are unregulated and with pure intention to shock shareholders into knee jerk reaction.
Banks have much more on their plate then a 90m debt pile from a business with 600m revenue (2019)
Interim CEO in place now, the dynamic duo on the way out l/gone. There’s a real opportunities for some gains.
Connells will come back with a counter offer but needs to be 300/350+ even then I don’t think it’ll be entertained.
Alchemy strong favourites or a capital raise through existing shareholders.
watch this space, big run up to Christmas.
Dick Turpin falls off his horse.
As a competitor I wish CWD much luck in their turnaround. Hopefully with a new team at the top the whole business can focus on the future ,slim down a bit and focus on the bits that make the money .It should be and will be a good business.
I imagine there is a huge sigh of relief within CWD this morning
The thoughts of a disinterested impartial party…………
Good and bad news for Connells. Bad news is they have had their offer rejected. Good news is they will have a spare few quid to pay back their furlough contribution.
Should make all managers directors . No way a corporate can compete with self employed owner doing 60 hour weeks and then being part of the community at weekends.
No money in it anymore .
Good news. More competitive tension pls.
As expected with both Paterson &Hoskings opposed the Connell’s offer kicked firmly into touch
Posts on this board about a super trio,fanciful.
Having failed to sheepsteal CWD Alchemy have now increased their bid which again is offering an umbrella whilst the sun is shining.
Clearly keen to get their revised bid in before the good news emerges about H2 performance where CWD have put plenty of hay in the barn.
They are not needed or the £70m capital raise which will only serve to dilute exisiting shareholders
Just goes to show how the BODS were shafting shareholders by recommending the previous Alchemy offer.
Hopless,hapless and helpless.
This story far from over Bring on the grown ups
Not sure that I agree with the sun is shinning quite as brightly as you believe.
Less than 6 month ago, the share price was around 60p so the ability to sell at £2.50 today seems a good return.
Whilst in H2 Countrywide may have more “Hay to put in the Barn’, the reality is that over the past 5 years, their farming techniques have yielded poorer harvests than the other farmers. (Connells have been far more productive)
Hard to believe this bumper harvest went unnoticed by any party who conducted due diligence.
Were the banks and lenders so convinced that this “Ray of Sunshine” was a permanent feature, they would not be applying so much pressure. Few companies that have taken the extraordinary measures to survive continue in the long run.
No doubt Alchemy see there is a “Buck” to be made, as the parts of the company are probably worth more than the whole.
The History of the High Street is littered with names that would have seemed to be almost institutional. Debenhams being one such case. Woolworths, Thomas Cook, MFI, Comet just to mention a few. The world has moved on without complaint.
Countrywide has no intrinsic right to survive. Without it, estate agency will still exist and houses bought and sold.
As Countrywide have discovered in their search for a new CEO, grown ups are hard to find!
hard to compare the running of retail outlets to Letting and Estate agencies.
The businesses are run totally different to retail (Just ask Ms Platt). Estate agencies are much more straight forward to run on a corporate scale than retail outlets, in my opinion.
Countrywide have weathered huge storms this year, many will have written them off in March.
I’ll stick my neck on the line – 2021 will be the best year for Countrywide in terms of bottom line profit in the past 3 years.
Well. in May the market hadn’t anticipated that the stamp duty changes would be gifted to kick-start the market
Those who anticipated that sales would go through the roof who managed to enter at 60p have done very well indeed
The Severn Bore has carried onto Glocester in October and November too .H2 revenue likely to be 30,%+
CWD find themselves in the position today through no fault of the troops. A series of truly dreadful decisions by the BODS having foolishlyspent hundreds of millions buying up disappearing revenue expensively leaving a stranglehold debt to service
The story is far from over Connell’s will. need to table an offer of 300p +to stand half a chance.Hold onto your hollyhocks plenty more action yet
Good News.
Connells offer was speculative at best.
I hope Mr Bowcock politely told them where to go.