The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Sequence and Connells staff all the way up to MD level run separately
I don’t think it would be logistically possible for a regional manager to cover a mixture of CW and Connells offices
Maybe MD level they could bring the roles together but it’s a huge business to navigate combined.
Main headcount reduction will be in head office roles I feel.
Connells are picking up a bargain here
Once they’ve amalgamated the head offices and Merged IT Services this sleeping giant CW will rise.
Local brands are some of the most well respected in the business,
this is good news for CW front line staff who will now be led by an exec board with experience
This is good news for Connells/Skipton who acquire the largest property business in the UK and now own 3 huge players (Sequence, Connells and CW)
This is bad news for investors who know that with a strong steady leadership team they could turn around their investment. If you invested 7 years ago and still hold the shares, you may feel like they’ve lost so much value you may aswell put it all on red with a new experienced and dynamic exec board and keep trading as CW is currently
Hoskings looks to be hoovering up more shares
alchemy been very quiet
Previous reports state Alchemy has the backing of Hoskings and he values the new Alchemy offer @ equivalent of 400p per share
Alchemy been very quiet since Connells offer
In true CW style let’s wait for the announcement between Xmas and new year
I sense a revised offer coming from Alchemy which will receive immediate support of the board.
No doubt a lot going on behind the scenes between major shareholders and Alchemy.
I think Connells will have to be at 400/450p to turn shareholders heads.
I think we will see a revised bid from Alchemy, standard practice to run the clock down. Connells had until 5pm Monday to table a new bid and this only came in at 8am on the Monday.
Usual games
I still can’t see a full sell out to Connells, far to undervalued. The value of the business broken up completely will likely be worth 2/3x what Connells are offering.
If neither offer gains sufficient support it’ll be a simple capital raise from current shareholders to see it through any troubled water post stamp duty ban & secure new medium term financing with lenders.
Lenders will be very receptive to any solution which pays down debt, after all, CW are operationally now profitable and due to sustainable income through FS, Surveying and Lettings are In much better financial shape than other institutions (perhaps retail) which will likely to be dogged by futher closures in Jan/Feb due to Covid.
Not high enough to turn the heads of Oaktree and Hoskings.
D Day is here for CW
Will it be
1) Alchemy
2) Small capital raise from existing investors
3) Connells all cash offer
I think probability runs in the above order... what’s peoples thoughts? Alchemy seem very confident.
I think year end results will be very strong finish.!
Pipeline is booming at the moment and exchanges following
CW branch operations actually very profitable now, I would guess after lockdown any loss makers would have been shut. Lettings is a big part now, 70,000 managed and they will need everyone of them to provide consistent income through any choppy waters over next 18 months
It’s an interesting move by Alchemy, they’ve shown their hand first and then also published support for their deal. The reason I think Hoskings supports is bulletproof is mainly due to the fact he’s pledged support for it before seeing Connells offer - why not wait until 5pm Monday and then declare support.
It’ll be an interesting run in.
Alchemy with Hoskings and Oaktree go close. With Paterson they win the crown.
Connells without Hoskings and Oaktree is impossible to secure the votes needed.
If Connells did win the crown, arguably the foot soldiers in CW are more capable and the brands (not the holding company) have better local reputations then Connells themselves, it will be interesting to see how much synergy between the companies there would be once the buyout is complete. Office closures yes but i sense that would be Connells side aswell as CW.
Interesting times ahead, plenty of skin in the game myself. I invested in April 2020 so watching this one like a hawk.!
Agreed, the definitely do not need to gift Alchemy the company.
Hoskings and Oaktree together backed by a few smaller shareholders will give Alchemy the crown. Hoskings released this yesterday
‘Countrywide received a second offer from private equity firm Alchemy Partners, which immediately won backing from its biggest shareholder.
Hosking Partners, owned by tycoon Jeremy Hosking, said the fresh proposal was ‘a major improvement’ and pledged support. The firm has a 20.9 per cent stake in Countrywide’
If they hold 21% & Oaktree nearly 10% it’s impossible for Connells to win the crown with out one or either of them. Hoskings is the king maker and it looks like him & Oaktree have already made their decision on which way this goes!!
Would be surprised if Oaktree back tracked , them and Alchemy were involved in the recovery in 08 for Countrywide. Also Hoskings won’t back a sell off I don’t think to Connells unless it’s an ‘offer that can’t be refused’
YTD high is 355p so anything north of this will be considered in my opinion.
I still think Alchemy will win the race but we will see a last ditch offer on Monday morning from Connells.
Both deals are complex for different reasons, Pros and Cons either way.
Whatever happens, the winner will need support from Oaktree and Hoskings, presently Alchemy have both and I bet both oppose a full sale off at almost any price under 400p. Let’s not forget that Alchemy do have some former CW heavyweights in association with, public shouldn’t be fooled, if Alchemy get the nod there are some big hitters in the shadows that can drive this business
Can’t see Connells winning the race now
Alchemy have secured 45% of the votes already
Connells would need 75% so they would face an uphill struggle to convert the alchemy support across to them at the 11th hour.
Interesting run in on Monday 7th, my prediction is that Connells will make a counter offer but get turned down. Alchemy to get across the line and this is all formalised before end of Year.
Just in
Connells off ‘unanimously’ rejected by shareholders
Good news, 2.50p a share is laughable.
Revised offer from Alchemy now on the table and the other option as I mentioned was a small capital raise.
It’s a bold move but when you think that LSH was under offer at 36m this time last year now (although it fell through) this should give you an idea of the company total value
Mortgages and Surveying are huge profit drivers, if LSH was worth 36m both of these parts of the business alone must be worth 80-100m each.
If I was running Cwd my 3 year plan would be simple.
- Capital raise 20m pay down debt and secure medium term financing
- Sell off LSH & Hamptons raise around 70m.
- retain John D Wood as single premiere brand.
- scale down branch operations taking the 700 branches down to 500 with an aim of 40% ROS from EA and Lettings total. 40% ROS will create a good level of EBITDA even once central overheads are accounted for.
- scale back of non fee earning and support roles and invest funds from Hamptons and LSH sale into prop tech to support this.
- introduce a CMO (chief marketing officer) to the board.
Within 18 months you’d have a profitable business with debt paid down with a smaller but more efficient workforce with greater use of Proptech.
A reliable source informs me capital raise very much the favourite at the moment.
Mr Long departing I am sure was mainly due to the city and banks losing faith in him, the alchemy deal was a great deal for himself but dreadful for the shareholders. Integrity was lost when he backed it and the Connells turned up with a price which was still well below market value IMO.
Any asset stripper can see value in this company, their mortgage and surveying businesses are huge profit makers and Lettings a consistent performer in all market conditions
Sadly, over the years it’s been the estate agency side which has degraded and degraded. Currently in purple patch which is resulting in high net and exchanges. In many offices lettings side is holding the finances up and keeping the lights on.
My outlook - capital raise to secure medium term financing. Sale of LSH, Hamptons and John D Wood (in H1 2021) to free up large amount of capital (I hear movements internally are already happening to segregate the business from core business). Debt will be cleared down to circa 45m and new credit facility agreed.
Connells offer is fire sale price, would be criminal to sell out for that price.