Countryside Partnerships rebuffs take-private overture

Inclusive Capital Partners has had its a second approach to buy Countryside Partnerships rebuffed by the board. The San Francisco-based investment adviser has been courting Countryside Partnerships for several months, with a view to taking the housebuilder private. In its letter, In-Cap asked Countryside’s board to engage in good faith and provide access to due diligence, to determine if terms of a recommended offer could be agreed upon. But on Thursday Countryside rejected the request, informing In-Cap that it will not engage with In-Cap or provide access to due diligence materials. In-Cap is proposing a 295p per share offer for Countryside’s entire share capital, other than the 45.8m shares already owned by In-Cap. Its holding equates to around 9.2% of the company. The offer represents an adjusted premium of 31.4% to Countryside’s closing share price on 27 May, and implies a multiple of 16.5 times enterprise value. In-Cap said the multiple implied by the possible offer compared favourably with other transactions, such as Vistry’s acquisition of Galliford Try in 2020, which was at only 5.5 times EV. It pointed out that Countryside offered a multiple of just 8.7 when it bought Westleigh in 2018. In-Cap added that “against the backdrop of the current business challenges and lack of shareholder support”, it believes that Countryside is “better served to execute its turnaround strategy in the private markets, where the management team can focus on operating the business for the long term”. In-Cap said Countryside had “an impressive 30-plus year track record of regeneration” in the UK and was “very well-positioned in the industry”. It added that the business “also generates meaningful social value”. However, it added that Countryside had “underperformed in comparison to its potential” over the past two years. “In-Cap believes that the company would be in a better position to turnaround its business as a private company rather than as a public entity, where near-term profitability and consistent earnings results are expected by investors,” it said. Founder and managing partner Jeffrey Ubben said: “As a holder of approximately 9% of the issued share capital of Countryside, In-Cap believes Countryside is best positioned… to succeed as a private company under ownership of investors with a long-term investment approach. “In contrast, the board of directors of Countryside has presided over the flawed acquisition of Westleigh in 2018, a dilutive equity financing in 2020, and the appointment of a chief executive officer with little to no prior public company executive experience that oversaw overly ambitious expansion into new geographies and investment into excess manufacturing capacity that is now generating losses.” Ubben concluded: “For the reasons set out above, we believe our proposed offer represents a highly attractive premium for Countryside shareholders. We believe that Countryside shareholders should be informed about our proposal to enable them to form their own view.” To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Image from Countryside