Estate agency Connells has approached rival Countrywide about a possible 250p per share takeover bid for the business.
Countrywide said the approach is “at an early stage” and that Connells has until 7 December to confirm a bid.
In its own statement on the proposal, Connells said it is undertaking due diligence on Countrywide . The company pointed to Countrywide’s “urgent need of recapitalisation to reduce its net debt and lessen its exposure to its lenders”.
Connells said: “Connells believes that Countrywide needs a new management team, with real estate agency expertise, and a new strategy to turnaround the business. The enormous scale of the challenge that the new team will face can be seen by the fact that they will need to reverse the performance of a business that has lost over £500m pre-tax over the last three calendar years.”
The emergence of Connells as a possible bidder for Countrywide throws into doubt a planned £90m investment from private equity house Alchemy Partners, which last month agreed terms of a deal to take a majority stake in Countrywide.
Connells said the Alchemy proposal would lead to Countrywide shareholders “suffering material dilution at a discounted price and being exposed to significant ongoing risk”.
The company added: “The business would have been operated by an unproven and, at least in part, unidentified management team, with an uncertain strategy, reduced shareholder protections, high cost debt, and ongoing exposure to a challenging market environment.”
Countrywide has now delayed a shareholder meeting over the Alchemy investment and told investors to take no action over that proposed deal. The company added: “In the meantime, the board will continue to engage with its shareholders to examine all potential options to deliver a sustainable capital structure for the company and to maximise shareholder value.”
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