Countrywide shares soar after announcing Connells bid approach

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.”

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7 Comments

  1. Hillofwad71

    “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

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  2. Property Poke In The Eye

    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.

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    1. Hillofwad71

      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    

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  3. Ric

    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 ##

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    1. Hillofwad71

      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

       

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    2. smile please

      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.

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      1. Ric

        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!

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