It has been announced that Connells has agreed terms with Countrywide to acquire the business at 395p per share.
A statement to the market this morning says:
· The boards of Connells Limited (“Connells”) and Countrywide plc (“Countrywide” or the “Company”) are pleased to announce that they have reached agreement on the terms of a recommended cash offer by Connells for Countrywide (the “Acquisition”).
· Under the terms of the Acquisition, each Countrywide Shareholder will be entitled to receive 395 pence in cash for each Countrywide Share.
· Connells has received written confirmations of support for the Acquisition from Countrywide Shareholders in respect of, in aggregate, 16,751,287 Countrywide Shares, representing approximately 51.03 per cent. of the existing issued ordinary share capital of Countrywide as at 30 December 2020, being the last Business Day prior to the date of this Announcement.
· The Acquisition will be implemented by way of a court-sanctioned scheme of arrangement between Countrywide and the Countrywide Shareholders and is expected to complete in the first quarter of 2021.
· All of Countrywide’s lenders will be repaid in full and Connells will provide additional investment in Countrywide’s technology, branch network and people, stabilising and enhancing Countrywide’s business for the benefit of its customers, employees and other stakeholders. Further details are set out in paragraph 6 of this Announcement.
Commenting on the Acquisition, David Livesey, Connells Group Chief Executive, said:
“I am delighted that we have reached agreement with the Countrywide Board and major Countrywide Shareholders on a recommended acquisition of Countrywide. Our revised offer of 395 pence per Countywide Share provides shareholders with a 172 per cent. premium to the unaffected price, and has received strong shareholder support including by way of irrevocable undertakings from major Countrywide Shareholders. We believe that the Acquisition is a great deal for all stakeholders.
“Our primary motivation for the Acquisition is to invest in and grow the Countrywide business. We believe that we have the right management team, strategy and investment firepower to work with the talented teams at Countrywide and lead Countrywide into a bright future.”
The statement gives an overview of Connells’ plans for the business:
Connells’ primary motivation for the Acquisition is to invest in and grow the Countrywide business. Based on Connells’ knowledge of Countrywide and existing presence in the UK estate agency sector, Connells believes that there will inevitably be some duplication of operational infrastructure between the two businesses where efficiencies may be achievable. In this context, Connells has identified some areas of potential recurring cost synergies, including:
· certain duplicated costs across some head office and/or centralised administration functions, which could result in some headcount reductions and relocations;
· leveraging IT expertise and best practices across both Connells and Countrywide; and
· operational cost savings from the removal of listing, administrative and other related operational expenses.
Other than the above-referenced head office and centralised administration functions, there are no specific identified potential cost savings which would involve a material reduction of employee headcount.
Connells intends to maintain and enhance Countrywide’s current service offering and invest in its branches, technology and people to put the Countrywide business back on a solid footing. Connells does not anticipate making any material changes to the locations or functions of Countrywide’s branch network.
So far as staff are concerned, the statement says:
Connells attaches great importance to the skills, experience and continued commitment of Countrywide management and employees, and believes that they will benefit from greater opportunities as a result of the Acquisition. In addition to sharing a customer-oriented focus on quality of service and successful outcomes, Connells believes that the employees of Countrywide will benefit from being part of a larger, more resilient estate agency organisation.
There are no agreements or arrangements between Connells and the management or employees of Countrywide in relation to their ongoing involvement in the business and the Acquisition will not be conditional on reaching agreement with such persons.
Connells has not entered into, and is not in discussions on proposals to enter into, any form of incentive arrangements with any member of the Countrywide Board or senior management who are interested in Countrywide Shares.
The implementation of any employee reductions by the enlarged Connells Group will be subject to comprehensive planning and engagement with employees and consultation with employee representatives as required by applicable law. Any affected employees will be treated in a fair and equitable manner consistent with Connells’ culture of respect.
The non-executive directors of Countrywide will each be expected to resign from his or her office as a Countrywide Director upon completion of the Acquisition.
Timing and funding.
Connells expects that, subject to receipt of the necessary FCA approval, the Acquisition will become Effective by the end of the first quarter of 2021 and that the Cash Consideration payable by Connells pursuant to the Acquisition will be funded from an intra-group credit facility to be provided by Skipton to Connells.
Evercore, as financial adviser to Connells and Skipton, is satisfied that sufficient resources are available to Connells to satisfy in full the Cash Consideration payable to Countrywide Shareholders under the terms of the Acquisition.
