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Summary
- The Financial Conduct Authority has given approval to Countrywide-Connells merger.
- Countrywide’s shares will stop trading on the London Stock Exchange on 8 March and delisted on March 9.
The Financial Conduct Authority has given its approval to Countrywide Plc’s (LON:CWD) merger with Connells group. Countrywide’s shares will stop trading on the London Stock Exchange on 8 March and would be delisted on 9 March. Connell’s acquisition of Countrywide at £130 million has already got shareholders’ approval.
Now, with FCA clearing the deal, the only hurdle that remains is clearance from the Competition and Markets Authority (CMA) if it decides to investigate the deal as anti-competitive. Though, after the deal, Connells had said that the merger would not create competition worries in the markets where both the companies operate.
Countrywide has been looking for ways to save the company from a debt burden of £91.9 million. The company had sought emergency funds worth £140 million. It had to also shut down several of its branches due to huge losses.
In the first half of 2020, Countrywide’s revenue from operations fell to £173.8 million from £241.6 million in the first half of FY19, and its losses from operations stood at £40.1 million in the first half of FY20. Revenue from operations fell during the first half of FY20 ended on 30 June 2020. The company in the first half of FY20. In the same period, its revenue contracted 28 percent.
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The deal
The company had been trying to find buyers and have had multiple rounds of negotiations with various companies. Connells itself had made a previous offer, an initial one of 250 pence, which was rejected by Countrywide.
In February last year, Countrywide negotiated with LSL Property Services. LSL was negotiating for a £470-million takeover. But in the following month, LSL Property conveyed to the stock exchange that it would not be making any offer to Countrywide. Private equity fund Alchemy was in talks with Countrywide for a merger, which was also being backed by Countrywide’s former CEO Peter Long. However, after a second offer, these negotiations too fell through.
But ultimately, the final offer from Connells sealed Countrywide’s takeover bid. Connells increased its initial offering from 250 pence a share to pay 325 pence a share.
Countrywide has as many as 60 famous brands, including Bairstow Eves, Gascoigne-Pees and King & Chasemore. Connells’ 25 brands include Allen & Harris, Bagshaws Residential, Barnard Marcus in London and Fox & Sons. Countrywide has 651 branches, while Connells has 581, which would all come together as part of the deal.
Countrywide’s loans would be settled in full, and Connells would help in stabilising Countrywide’s business by investing in technology, its network of branches and employees. Stocks of Countrywide were trading at GBX 393.20, marginally down by 0.15 per cent at 9:15 AM GMT+1 on 26 February 2021.
