The Times - UK (2020-12-03)

the times | Thursday December 3 2020 1GM 49

Business

Hedge fund demands chairman’s exit

Louisa Clarence-Smith third biggest shareholder, with a 9.4 per

cent stake.

Usman Nabi, the founder and man-

aging director of Browning West, said

that if the group sold the housebuilding

business, the valuation of the partner-

ships unit could rise.

Countryside is led by Iain McPher-

son, 47, who was appointed chief execu-

tive in January after more than five

years in senior roles at the company.

David Howell, 71, has been non-execu-

tive chairman since January 2015. He

was chairman of Western & Oriental,

the tour operator, chief financial officer

of lastminute.com and finance director

of First Choice.

Mr Nabi said that the company

needed “a very experienced chair” to

support a chief executive with “no

public company board experience”.

Browning West has called on Country-

side to “immediately” appoint Mr Nabi

to the board to bring mergers and ac-

quisitions and capital allocation ex-

pertise and to help to search for a new

chairman.

Countryside is due to report its full-

year results today, which will show the

impact of the first national lockdown,

when it closed construction sites. It sold

4,053 homes over the period, 29 per

cent fewer than in the previous year.

Operating profit is expected to be

£54 million, compared with £234.4 mil-

lion a year earlier. The housebuilder

had a strong order book of £1.4 billion,

up 15 per cent on the previous year, and

it raised £250 million in a share placing

in July.

Countryside said: “The board

remains focused on acting in the best

interests of all our shareholders to

maximise the value of the company.”

Shares in Countryside closed down

3¼p, or 0.7 per cent, at 440¾p.

An activist investor has called for

Countryside Properties to jettison its

chairman and sell its private house-

building business.

Browning West, a Los Angeles-based

hedge fund, said that Countryside’s

management and board had shown “a

reluctance” to address the company’s

“significant deficiencies”.

Countryside, a FTSE 250 house-

builder, builds a third of its homes for

the private sales market. The remain-

der are built for housing associations,

local authorities and the private rented

sector within its partnerships business.

Browning West wants Countryside

to focus entirely on its partnerships

division, which it said had a return on

investment of 60 per cent, compared

with 20 per cent for the housebuilding

business. The investor is Countryside’s

back LSE Refinitiv deal

its approval. Shares in London Stock

Exchange Group rose by 764p, or

9.6 per cent, to £87.54 as investors

welcomed signs that the takeover is

moving closer to completion.

David Schwimmer, LSE Group’s

chief executive, believes that the deal

will transform the company.

The London exchange can trace its

roots to a late 17th-century coffee house

in the City of London, where lists of

share, commodity and currency prices

were published. It now sits at the heart

of global financial markets. As well as

owning Britain’s exchange, it is also

behind the FTSE and Russell equity

indices, LCH, the world’s largest

derivatives clearing house, and Tur-

quoise, a trading platform for European

equities.

By acquiring Refinitiv, Mr Schwim-

mer, 51, is aiming to strengthen the

group’s presence in data, an area that is

ever more important as trading in

markets becomes increasingly elec-

tronic.

This will cut the group’s dependence

on market-trading volumes, which are

volatile, and will boost the company’s

operations in North America, Asia and

the emerging markets.

Refinitiv is jointly owned by Thom-

son Reuters, the information business,

and Blackstone, the American private

equity firm. It is behind the Eikon news,

data and trading platform that is used

by financial services workers and which

competes with Bloomberg’s terminals.

London Stock Exchange Group ex-

pects the acquisition to be completed in

the first quarter of next year. Other

regulators, including in Singapore, are

yet to approve the takeover.

A spokeswoman for the exchange

and the commission declined to com-

ment.

ALAMY

The battle to take control of Britain’s

biggest listed estate agency group

escalated yesterday when its board

rejected a bid from a rival and a private

equity firm made a revised investment

offer.

Countrywide, which owns the

Hamptons, John D Wood and Bairstow

Eves chains, is in turmoil as it tries to

find a way to reduce its £92 million

debts.

Peter Long, 68, resigned as its chair-

man last week after shareholders failed

to offer support for his plan to hand

control of the group to Alchemy Part-

ners, a British private equity firm, via a

discounted placing at 135p a share.

Catalist Partners, an investor with a

10.5 per cent stake, had called the

proposal “unnecessary, ill-judged and

dilutive”.

Philip Bowcock, 52, a former chief

executive of William Hill, the book-

maker, has been installed as interim

chief executive to find a refinancing

solution that is acceptable to share-

holders.

Alchemy’s bid was trumped by one

from Connells, a smaller rival estate

agency, which made a takeover

approach for the whole business at

250p a share. Countrywide said yester-

day that its board had “unanimously

rejected” the £82 million proposal and

added that it was considering a revised

offer from Alchemy.

The buyout firm’s earlier offer would

have handed it a controlling stake in the

business at 135p a share in return for a

£90 million cash injection. Under the

revised offer, it would inject up to

£70 million, including £35 million via a

225p-a-share placing of 15.6 million

shares. A further placing of 35 million

shares would be offered to existing

shareholders at 100p a share in a plac-

ing that would be fully underwritten by

Alchemy. Existing shareholders also

would have the option to sell their

shares to Alchemy at 250p a share.

The private equity firm has said that

it would accelerate a turnaround by

installing a management team with a

new pay structure, cutting costs and

investing in IT and automation. It said

that it would “keep the business

substantially in its present form,

avoiding any distressed asset sales that

both Alchemy and the Countrywide

board believe would be value-des-

tructive”.

Hosking Partners, the biggest

shareholder with a 21 per cent stake,

supported the revised offer. “The

Alchemy deal is a major improvement

on their first effort and we have

presented a letter of intent in support of

it,” a spokesman said

Connells responded yesterday by

urging Countrywide shareholders to

“take no action” in relation to the

revised Alchemy proposal, sparking

hopes that it will make a more generous

offer.

Connells, which could bring its own

management team to Countrywide,

has 600 branches. It has claimed that

Countrywide has “the potential to

enter administration without a signifi-

cant capital injection”. Connells is a

subsidiary of Skipton Building Society.

Countrywide has 850 branches, of-

fering estate agency, conveyancing and

surveying services. It has 10,000 staff.

In a statement, Countrywide said:

“The board remains committed to

engaging with all major shareholders to

examine all potential options.”

Anthony Codling, chief executive of

Twindig, a property information

platform, said: “It seems that the

management team are acting as the

‘agent’ to the shareholders, in a bid to

raise the price, but, just as with houses,

the highest offer isn’t necessarily the

best offer.”

Connells has until Monday to make a

firm offer. Alchemy is working to a

deadline of December 30.

Shares in Countrywide closed up by

14½p, or 6.35 per cent, at 241p last night,

giving it a market capitalisation of

£79.1 million. When the company was

floated on the stock market in March

2013, it was worth £750 million.

Countrywide

slams door on

rival’s takeover

Louisa Clarence-Smith

executive, hinted

in September that

it was looking at a

rights issue

alongside disposals

of parts of the

business. Its

borrowings have

ballooned on the

back of a €3 billion

bailout by the

German

government.

Tui, which fell to a

third-quarter loss of

€1.1 billion, said that, with vaccine

availability imminent, it expected “a

significant reduction in travel

restrictions and thus a further

improvement in its working capital

and liquidity situation”. Its shares

fell 30p, or 5.9 per cent, to 481½p.

which €420 million is convertible

into Tui shares. The Anglo-German

group said that the package

“strengthens Tui’s position and

provides it with sufficient liquidity

reserves... The package became

necessary due to the travel

restrictions caused by the rising

number of [Covid] infections and the

booking behaviour of customers.”

The latest package supplements

existing financing from the German

government in the form of a

€2.85 billion credit line and a

warrant bond of €150 million with

rights to 58.7 million shares.

The rights issue is being backed by

Alexey Mordashov, 55, Tui’s largest

shareholder, who will exercise his

full rights in respect of his 24.9 per

cent stake in the company.

Analysts expressed concern at the

level of dilution.

Becky Lane, at

Jefferies, said:

“Another Tui

package is not

unexpected.

However, we think

the scale of dilution

may be. A rights

issue of 509 million

shares is a 46 per

cent dilution.”

Tui Group was

created in 2014 by

the merger of Tui Travel, of

Britain, and Tui AG, its German

majority shareholder. It employs

70,000 people around the world and

has more than 400 hotels, 18 cruise

ships, 150 aircraft and more than

1,300 travel agencies.

Fritz Joussen, 57, Tui’s chief

e

in

it

ri

a o b b b b b G g

th

€1 1 billionsaidt

avelof

£79.1m

Stock market value of Countrywide

last night

Source: London Stock Exchange