Shareholders to block Countrywide takeover

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The Independent Online

The attempt to take Countrywide, Britain's biggest estate agent, private is expected to fail today, heaping pressure on the management team that led the buyout.

Rebel investors are expected to block the deal when shareholders meet in London this morning to vote on the proposed £950m takeover of Countrywide by the private equity company 3i.

Countrywide's management, led by chief executive Harry Hill, need 75 per cent of shareholders to back the takeover. The deal looks set to fail after key shareholders holding around 20 per cent of the company committed to vote against the offer, arguing that the price was too low. "It's on a knife-edge," a source close to Countrywide said.

Whether Mr Hill will retain his role after the collapse of the deal remains unclear as the board recommended the offer. Mr Hill was due to replace the outgoing chairman Sir Christopher Sporborg, who founded the chain, before the deal was announced.

The takeover was thrown into doubt after some of its largest shareholders publicly declared that the price on offer was not sufficient. Shareholders have been offered 490p a share as well as a sixth of a share in the UK's largest property website, Rightmove. That takes the value of the bid to roughly 568p per Countrywide share. 3i said it would not raise its bid.

The shareholder Standard Life has argued that the offer does not reflect the health of the UK housing market, and said it would vote against the deal. Artisan Partners and Boussard & Gavaudan also oppose the deal, and last Friday Jana, another US hedge fund thought to be hostile to the 3i bid, tripled its stake in Countrywide to 5.5 per cent. Together the four shareholders own 20 per cent - almost certainly enough to derail the bid.

Sir Christopher said last week that Countrywide's share price would plummet toward 400p if the deal was blocked. He described the view that the deal undervalues the business on a long-term basis as "slightly optimistic".

Countrywide has been urging investors to accept the offer over the past week, and has pointed to the Bank of England's decision to raise interest rates and recent house price surveys to suggest that the UK housing market is close to its peak. Analysts have described the 3i-backed offer as fair but not overly generous.

Countrywide owns a network of over 1,100 real estate agencies across the UK which operate under franchises like Bairstow Eves, Fulfords and Taylors. The company also offers services such as surveying and conveyancing. It has a 21.5 per cent stake in Rightmove, which was floated last year.

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