EYE NEWSFLASH: LSL says it will not make offer for Countrywide

| Rosalind Renshaw

LSL said this morning that it will not be making an offer for Countrywide.

The shares have crashed by half – down 49.62% at midday.

LSL gave no reasons for pulling out of the deal in a statement to the stock market this morning.

Both Countrywide and LSL had each confirmed that they were in discussions regarding a possible deal.

LSL, parent company of Reeds Rains and Your Move plus other brands, had  until March 23 to make an offer but this morning made it clear that any deal between the two is off the table.

The rather technical notice this morning to the stock exchange refers to some possible scenarios under stock exchange rules:

“Under Note 2 on Rule 2.8 of the Code, LSL, and any person acting in concert with LSL, reserves the right to set aside the restrictions in Rule 2.8 in the following circumstances: (i) with the agreement of the board of Countrywide; (ii) if a third party announces a firm intention to make an offer for Countrywide; (iii) if Countrywide announces a “whitewash” proposal (see Note 1 of the Notes on Dispensations from Rule 9) or a reverse takeover (as defined in the Code); and (iv) if there has been a material change of circumstances (as determined by the Panel on Takeovers and Mergers).”

Just after 8am this morning, Countrywide issued the following statement to the stock market:

“Countrywide notes the announcement by LSL that it now no longer intends to make an offer for Countrywide.

“As announced by Countrywide on the 11th March, the company has been seeing the benefits from its ‘back to basics’ turnaround plan, with continuing operations having returned to growth in profitability.  The board of Countrywide remains confident in the strength of the underlying business as an independent company.

“The company has seen a positive mood swing in public sentiment through the early part of 2020 which we have seen reflected in a strong start in agreed sales which are ahead of the board’s expectations through February 2020.  Whilst we have seen some softening in recent days as a result of Covid-19, it is too early to assess that impact. 

“The group expects to announce full year results later this month.”   

In trading this morning, Countrywide shares plunged immediately, and kept on falling.  Countrywide shares plunged over 33% by 8.45am, and three quarters of hour later by 39% (9.15am). By 10.15am, the price had plummeted over 42%, to 95p, and by noon the fall of 49.62% took the price down to 82.95p

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20 Comments

  1. Mrlondon52
    March 16, 2020 at 07:34

    I imagine corona changed this discussion. It has become even harder to forecast income and the risks have increased. Tricky times.

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    1. Bertie
      March 16, 2020 at 07:50

      Nah. They’ve looked under the bonnet and seen what a mess it is.

      Probably also gave them some good intel on a competitor

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    2. Hillofwad71
      March 16, 2020 at 09:06

      This deal has been  doomed for weeks  as was dependent on the sale to the Dane to make  the £90m + debt more palatable

      Coronavirus just  sealed the lid

      CWD struck a deal last year with the banks to amend the credit facility .

      This agreement had assumed the deal on LSH   was going to take place   CWD are now in breach  of this agreement

      The inept BODS counted their chickens before they  hatched

       

      So  in addition to the raft of costs incurred in the abortive sale  of LSH now a further load on the merger

      Lions  led by donkeys

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  2. smile please
    March 16, 2020 at 08:06

    Squeaky bum time for employees.

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  3. whatdoiknow58
    March 16, 2020 at 08:17

    Impossible to see how this will now end. Share price looking like it will continue to fall through the floor (again) so must be close to Oaktree having to step in to take it back  before their position is all but wiped out but at what price now with the market in free fall.  So sad.

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  4. Dyane
    March 16, 2020 at 09:19

    118p?? No……..not now. That was earlier. They are currently 59.65p (09.19h) Market cap £36.4M

    Last Tuesday they were at 278p so a nigh on a 75% drop in just a week or so.

    There’s no coming back from this surely?

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  5. Robert_May
    March 16, 2020 at 10:05

    Be careful what you wish for-  when corporate agencies break up invariably there is someone there to keep the doors open with a ready made register of listings.
    As someone who was there when the Pru bought local independents when the sell off came the competition didn’t evaporate, the town got itself a new invigorated and hungry competitor that had been absent for a while.

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    1. Hillofwad71
      March 16, 2020 at 11:05

      Robert
      I was a junior equity partner in a practice left 15 months before my ex partners  sold out .
        I could have timed my exit better! They were one of the last to be purchased by the Pru .In fact the Pru actually pulled out  of the deal as the market had already turned south
      My ex senior partner naturally  was incensed he wrote to all the directors at their home adddress saying  the Pru;s  motto was their  bond How possibly could they renegede on a  deal once they shook  hands . He literally embarrassed  and  bullied them   into going ahead
       
      15 months later having sat on their hands busily spending their monies in a quiet market ,collecting a salary on holiday homes at distressed  prices  the remaining 2 partners bought themselves back  for just a token  5% of the  monies received
       
      They told me that  most of that was paid with invoices not submitted !   

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  6. Retiredandrelaxed
    March 16, 2020 at 10:14

    A sensible decision by LSL at this point. Whilst there is clearly better resilience within LSL’s business than the mess at Countrywide, LSL will probably have enough on their plate dealing with the current coronavirus situation without also taking on all the problems at Countrywide, which would have been a substantial undertaking at the best of times.
     
    LSL may also have anticipated that their exit from a possible takeover would send Cwd share price into freefall, as has happen, and present a more tempting takeover target at some pointy in the future, possible even a pre-pack deal where LSL pick the tempting bits such as surveys and well performing offices out of administration, leaving the dross behind.

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  7. Hillofwad71
    March 16, 2020 at 11:35

    This is definitely the best yet .It says it all ,even with no one else to turn to after the failure to sell LSH they couldn’t see farther than their own backsides

    I should imagine that the BODS at LSL understandably didn’t want any  of them .

     

    ” Former Countrywide lettings boss John Hards suggested one of the other contentious sticking points would have been who sat on the board of the merged entities.”

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    1. Retiredandrelaxed
      March 16, 2020 at 12:32

      ” Former Countrywide lettings boss John Hards suggested one of the other contentious sticking points would have been who sat on the board of the merged entities.”
       
      As you say, HoW71 –   I should imagine the stumbling block was that LSL didn’t want to keep any of the CW board – certainly would have been if the LSL BoDs have any sense (which I believe they do, having worked there and met some)

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  8. GPL
    March 16, 2020 at 20:08

     

    It’s the “Dance of a Thousand Cuts”.

     

    My thoughts to the Genuine Footsoldiers led by The Clowns that never open the box to see what is actually going on in the world.

     

     

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