The Countrywide board has rejected Connells cash offer for the business and instead is considering a revised offer from City investment firm Alchemy partners.
The shock announcement will surprise many in the industry, who until now had viewed the Connells offer the best chance Countrywide has of avoiding potential administration and a brighter future given its experience and successful track record.
But the board has decided that Alchemy’s upgraded offer is in the best interests of its shareholders. This includes:
- An opportunity for existing shareholders to sell their Countrywide shares at 250 penceper share to be fully funded by Alchemy Partners.
- A cash injection of £70 million to be fully underwritten by Alchemy Partners including two new share issue offerings designed to raise £70 million, although this would see Countrywide’s shares downgraded on the London Stock Exchange.
“The Revised Alchemy Proposal would enable shareholders who wish to realise their investment in Countrywide to sell their shares to Alchemy Partners, whilst also enabling those shareholders who continue to believe in the potential of Countrywide to retain their existing stake and, if they choose, invest further capital,” says Countrywide.
But the Alchemy deal would also have to be voted through by its shareholders at a General Meeting, who would also have to agree to Alchemy controlling a majority of its shares – giving it total control of the company.
Alchemy would also require Countrywide to renegotiate its debt with lenders to reduce its repayments to below £50 million.
As Connells pointed out in its bid document, no one at Alchemy has any experience of running a large multi-brand estate agency, and its offers would clear its debts and re-capitalise the company, in contrast to the complicated new offer made by Alchemy.
“Connells is considering its options regarding the possible all-cash offer for Countrywide it had announced on 9 November 2020 and re-confirmed on 23 November 2020 and urges Countrywide shareholders to take no action in relation to the Possible Revised Alchemy Proposal.”