Countrywide also revealed that private equity investor Alchemy Group returned with an improved offer after its first one worth around £90m was rejected by shareholders last month which promoted two senior executives to leave the board.
Countrywide shares rose eight per cent to 244p in early trading although this is still down from the 355p in January and far below the £296 per share at its peak in March 2014.
The improved Alchemy deal would offer to buy some Countrywide shares at 250p each, matching Connells valuation, but would restrict which shareholders were allowed to sell their stakes.
Alchemy would also inject £70m into the struggling business through new share issues – split equally between two share purchases by Alchemy of Countrywide shares at 225p and 100p.
Alchemy would also want the new Countrywide business to be reduced to the standard stock market listing taking it off the premium listing.
This would mean the firm would only need to meet minimum EU equivalent regulatory standards, instead of the tougher premium requirements of listing and corporate governance.
The offer includes many conditions, including Alchemy being able to negotiate a write down of Countrywide’s £50m loans with its lenders and agreement that Alchemy would own more than half the share capital when completed.
“The revised Alchemy proposal would enable shareholders who wish to realise their investment in Countrywide to sell their shares to Alchemy Partners, while 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,” the Countrywide statement said.
The board will now discuss the revised offer with Alchemy Partners and all major shareholders.
Regarding the Connells deal it added: “Following a thorough review of the possible cash offer with its advisers, the board has unanimously rejected the possible cash offer.”
The announcement of an improved deal from Alchemy prompted a swift response from Connells which said the Alchemy bid remained a “highly conditional” transaction and urged Countrywide shareholders to “take no action” on it.
“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,” Connells said.
It has until 5pm on 7 December to decide whether to announce a firm intention to make an offer for Countrywide or to announce that it does not intend to make an offer.