Connells has this morning made a dramatic improvement in its bid to takeover Countrywide.
It has increased its cash offer from 250p per Countrywide share to 325p - a 30 per cent rise, to a 124 per cent premium on Countrywide’s closing share price on Friday.
Connells pledges that under its offer all of Countrywide's lenders will be repaid in full “and additional investment will be provided, giving the business the financial strength to recover from the under-investment of recent years.”
A statement from Connells continues: “Under the stewardship of Connells' experienced and successful management team, the combination will stabilise and enhance Countrywide's business for the benefit of its customers, employees and other stakeholders.”
Connells is facing a rival attempt to take control of Countrywide by private equity firm Alchemy Partners.
Referring to the rival bid, Connells today says: "Connells' offer is the only tangible and actionable proposition that addresses Countrywide's real and imminent challenges. The Countrywide Board has confirmed that Countrywide is in urgent need of recapitalisation to reduce its net debt and lessen its exposure to its lenders. The Countrywide Board has said that, in the absence of a recapitalisation there is a risk that Countrywide could end up in administration, with Countrywide Shareholders losing all or a substantial portion of their investment. Connells’ Offer addresses that need and provides Countrywide with a platform for growth free from external debt."
And in a possible reference to the perception of private equity firms as being asset-strippers, Connells continues: "Connells' primary motivation for the Offer is to invest in and grow the Countrywide business. Connells believes that significant and sustained investment is required in Countrywide's technology, network and people to put the business back on a solid footing. Connells intends to maintain and enhance Countrywide's current service offering and does not anticipate making any material changes to the locations of Countrywide's branch network."
Connells insists its offer is not conditional on clearance from the Competition and Markets Authority - as Alchemy last week suggested it might be - because "its proposed acquisition of Countrywide will not give rise to any competition concerns on any markets in which Connells and Countrywide operate."
Mid-morning today, Alchemy Partners issued its interim response, noting Connells' 7am statement and saying it was in turn considering its options. A further statement from the private equity firm will be forthcoming in the near future, it suggests, but in the meantime it "urges Countrywide shareholders to take no action in relation to the Connells offer."
On Friday after Alchemy had released a long and bullish statement saying it had achieved nearly 45 per cent shareholder support for its own rival plan for Countrywide - which you can see in detail here.
Alchemy claims its long-standing investment in Countrywide, and its separate ownership of a letting agency, give it a deep understanding of Countrywide’s activities and challenges.
By contrast, it suggests Connells involvement would lead to branch closures, a further run down of Countrywide staffing because of duplication, and may be subject to a probe by the Competitions and Markets Authority.
It adds It has an ‘outstanding new management team’ ready to swing into action, led by prospective chairman Carl Leaver.
“Alchemy firmly believes Countrywide has a strong future as an independent, listed company; however, unlocking that potential requires a comprehensive recapitalisation, a new management team and a reinvigorated governance structure” it says.