A leading Countrywide commentator has warned agents not to assume that Connells’ takeover of Countrywide is a ‘done deal’.
John Bodinham, who is a former industry player and minor Countrywide shareholder, says that although the firm’s board has recommended the deal, and more than 50% of shareholders are on board, uncommitted shareholders including Brandes Investment .
“They are nursing a huge loss on their investment having acquired their stake at a much higher level,” says Bodinham.
“For a further dice roll of £10m to increase their stake they could establish whether Connells might be persuaded to raise the ante to – maybe – £4.50p a share and more importantly attempt to mitigate some of their losses.”
One of the key reasons why Connells’ bid to buy Countrywide may succeeded is the support of industry figure Rob Patterson, whose investment vehicle Catalist Partners has backed the deal.
Patterson (pictured), who also owns the Sotheby’s Realty franchise in the UK, was a vehement critic of Countrywide’s initial attempts to sell the industry mammoth off.
He says: “Opaque financial reporting, a flawed business plan poorly executed and a failure to urgently repay debt, all contributed to an exceptional decline in the Countrywide share price over the past three years.
“Our analysis, set out in an open letter of the 19th August, identified significant value not reflected in Countrywide’s then share price.
“This improved offer from Connells is circa three times the price at which the Board of Countrywide previously recommend selling control at, a transaction which Catalist strongly opposed.
“It also brings the specific industry expertise Catalist thinks necessary to restore the core sales and lettings business, along with a track record of successful integration.”
The Negotiator understands that this is a recommended deal, and there is no other alternative. Connells says it has the support of 51% of the shareholders, including Oaktree, Hosking, Catalist and Schroders. Oaktree, Hosking and Catalist (46%) cannot sell their shares to any bidder other than Connells, even if a bidder puts a higher price on the table. Completion is expected at the end of this quarter.