Connells has this morning stepped up its efforts to acquire Countrywide after making a new and improve offer to buy the estate agency group.

Connells last week 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.

But the Countrywide board “unanimously rejected the possible cash offer”, and has decided instead to continue with Alchemy’s revised proposal.

But Connells has now returned with an improved cash offer at a price of 325 pence per Countrywide Share.

Connells has increased its proposed offer price by 30% following discussions with Countrywide’s major shareholders.

Under the Offer, Countrywide shareholders will, according to Connells’ statement, “receive immediate, certain and significant value, at a 124%. premium to Countrywide’s unaffected share price”.

Connells added that it believes it can help ‘stabilise and enhance Countrywide’s business for the benefit of its customers, employees and other stakeholders’.

Under the Offer, all of Countrywide’s lenders will be repaid in full and additional investment will be provided, giving the business the financial strength to recover from the under-investment of recent year.

The Connells board believes that its offer is ‘significantly more attractive’ to Countrywide Shareholders than any potential alternative proposal under which Countrywide remains a listed company with all the risks and uncertainties that this would involve.

Making specific reference to the rival offer made by Alchemy, the statement from Connells said: “The board believes the Offer is significantly superior to the possible revised transaction involving Alchemy Partners (“Alchemy”) (the “Possible Revised Alchemy Proposal”) announced by Countrywide on 2 December 2020, which would leave Countrywide with high levels of debt and significantly less capital than even the discredited first proposal from Alchemy. The Possible Revised Alchemy Proposal is complex, highly conditional and unclear in many important respects. It has not been agreed to by Countrywide’s lenders or by the Countrywide Board and would offer significantly less value to Countrywide’s shareholders than Connells’ cash offer. In addition, there is absolutely no certainty that the Possible Revised Alchemy Proposal would ever be delivered either in its current form or at all, or that any potential turnaround plan would be successfully implemented under Alchemy’s control.”

David Livesey, group chief executive officer of Connells, commented: “Countrywide desperately needs a deliverable solution to its current financial problems and lack of strategic direction. Putting Countrywide back on track requires sustained investment and gritty operational improvement over many years. Connells is offering a clear vision for the future, not yet another turnaround attempt based on wishful thinking and flaky financing. Connells’ cash offer of 325 pence per Countrywide Share is the only tangible deal on the table and gives Countrywide Shareholders a huge premium over the value of their Countrywide Shares before we announced our interest.

“Although we have approached the Countrywide Board to seek its recommendation of our Offer, we think it is in the interests of everyone for us to announce our offer today so that all of Countrywide’s shareholders are aware of the compelling nature of our proposal.”

Following this morning’s announcement of a firm intention to make an offer by Connells Limited, Countrwide has issued the following response: 

“Countrywide plc (“Countrywide” or the “Company”) notes the announcement today by Connells Limited (“Connells”) pursuant to Rule 2.7 of the City Code on Takeovers and Mergers (the “Code”) of its firm intention to make an offer to acquire the entire issued and to be issued share capital of the Company, in cash, at a price of 325 pence per Countrywide share (the “Connells Firm Offer”). 

“The Board will evaluate the merits of the Connells Firm Offer in consultation with the Company’s major shareholders, together with all other available options for the Company, including (but not limited to) the revised proposal from Alchemy announced by the Company on 2 December 2020 and a capital raise from existing shareholders of the Company.

“The Board urges shareholders to take no action at this time in relation to the Connells Firm Offer.”