UK’s largest estate agency group Countrywide reveals it is in takeover sights of rival Connells

Countrywide, the troubled estate agency group behind Bairstow Eves and Hamptons International, today revealed it is in the takeover sights of rival Connells.

It said the preliminary approach from the owner of London agency Barnard Marcus valued the company at 250p a share, equivalent to £82 million.

The move by Connells has prompted Countrywide to postpone a meeting of shareholders to approve a £90 million fundraising backed by private equity group Alchemy.

Countrywide, which is the UK's largest estate agency group, revealed last month that it was at a “critical inflection point” and in urgent need of recapitalisation to reduce its net debt and lessen its exposure to its lenders.

Its plan for a share placing at a price of 135p would have given Alchemy between 50% and 67% of the group. Countrywide also held merger talks earlier this year with LSL Property Services, which owns brands including Marsh & Parsons and Your Move.

The company has 850 branches in the UK, with its services also covering mortgages, conveyancing and surveying.

It said: “The approach is at an early stage and Connells has indicated that any offer is conditional upon, amongst other things, completion of confirmatory due diligence and the recommendation of the board of Countrywide.”

Connells said Countrywide needed a new management team and strategy in order to reverse the performance of a business that has lost over £500 million in the last three years.

It added: “Connells also believes that significant and sustained investment is required in Countrywide's technology, network and people to put the business back on a solid footing in a challenging market.”

The proposed offer from Connells represented a 72% premium on the undisturbed Countrywide share price prior to today's announcement. Shares were 58p higher at 203p this morning.

Numis Securities said the premium offered by Connells looked more attractive than the Alchemy offer, which would have left shareholders as minority owners. The broker added: “We will wait to see if Alchemy returns with a counter offer, although the premium offered by Connells makes it look unlikely.”