Estate agent chain Connells has confirmed an £82m takeover bid for competitor Countrywide, saying a cash injection by private equity rival Alchemy Group would not go far enough to rescue the embattled firm.
Connells said this morning that it has completed its due diligence work on Countrywide and reconfirmed its offer price of 250p per share in cash.
The company, which is a subsidiary of Skipton Building Society, said its investigation revealed that “significant capital investment is required” in excess of the £90m equity injection proposed by Alchemy.
As a standalone business Countrywide, which owns Bairstow Eve and Hampton International, has “potential to enter administration without a significant capital injection”, Connells said.
It added that it needs sustained investment over the long-term and a strong management team to lead a turnaround plan.
Connells also identified a “highly competitive environment” and “difficult and uncertain market conditions”.
The making of a firm offer is now subject to board recommendation and shareholder support.
David Livesey, Connells group chief executive, said: “Countrywide shareholders have repeatedly been promised jam tomorrow and it has never been delivered.
“There is no quick and easy fix for Countrywide. Turning the business around, especially in unpredictable market conditions, will be a difficult, expensive and lengthy process.
“Countrywide needs new ownership, not yet another speculative scheme that is based on hope rather than experience.
“Our proposal gives Countrywide shareholders significant immediate upside in cash, at a 72 per cent premium to the undisturbed price, with none of the downside risks of remaining independent.”
Countrywide cancelled a general meeting to vote on the Alchemy proposals earlier this month following Connells’ offer.
The latest proposals come after rival group LSL abandoned a potential £500m merger with Countrywide in March, terminating a deal that would have created the UK’s biggest estate agent, amid market uncertainty due to the coronavirus pandemic.