Seven days that slashed Countrywide’s value by 80%
Countrywide lost almost 80% of its share price over seven days in which three separate developments scuppered big plans the troubled estate agency had mapped out.
Last Tuesday, 10 March, the company’s shares closed at 256.6p – already their lowest since a share consolidation gave them a large boost at the end of 2019. But events became worse over the following days.
Yesterday (17 March), after the company had confirmed that it is struggling to sell its commercial arm and that a potential suitor had walked away from merger talks, its shares closed at 56p. About two hours later, the company announced that a high-profile boardroom hire has walked away from his role before even starting.
Countrywide lost almost 80% of its share price over seven days in which three separate developments scuppered big plans the troubled estate agency had mapped out.
Last Tuesday, 10 March, the company’s shares closed at 256.6p – already their lowest since a share consolidation gave them a large boost at the end of 2019. But events became worse over the following days.
Yesterday (17 March), after the company had confirmed that it is struggling to sell its commercial arm and that a potential suitor had walked away from merger talks, its shares closed at 56p. About two hours later, the company announced that a high-profile boardroom hire has walked away from his role before even starting.
Countrywide’s board has said a turnaround plan for the business is bearing fruit, and that it “remains confident in the strength of the underlying business as an independent company”. The stock performance suggests investors may have less faith.
The sale of Lambert Smith Hampton has been the longest running saga. Countrywide struck a deal last November to sell the business to John Bengt Moeller, owner of real estate group Great Global Holdings.
Countrywide chairman Peter Long said at the time of the deal being struck that LSH had faced “a challenging market” and that its financial position had deteriorated.
“It has also eaten into valuable management time, so it made absolute sense to seek a buyer for the business,” Long added. “It has always operated as a standalone business so carving it out from the rest of the group will not be difficult.”
Countrywide’s shareholders approved the £38m sale in December. But in early February the company announced to the market that it had been unable to secure the necessary payment to close the deal, delaying its completion owing to “John Bengt Moeller being indisposed during January and because of logistical difficulties relating to the transfer of the requisite completion monies”.
Last Wednesday (11 March), the company said Moeller had missed the deadline by which to close the deal. Although Countrywide added that it would continue to engage with Moeller to try to wrap the transaction up, it added that it was talking to another possible buyer for LSH and was also considering legal action for “damages and costs” against Moeller. Moeller told EG he hoped the delay would be “solved soon”.
For much of the period during which the LSH sale was held up, Countrywide was also engaged in other deal discussions, having confirmed that it was exploring a tie-up with rival agency group LSL Property Services. Earlier this week, however, LSL said it will not be making an offer for Countrywide.
With two deals hitting the rocks in the space of seven days, Countrywide’s shares closed yesterday down 78% from their price on 10 March, before the update to the LSH sale was given to the market. It was after the market closed yesterday that the company confirmed Bruce Marsh, a former finance director at Tesco, had decided not to join the company as chief operating officer.
Countrywide had announced that Marsh would join the business last October. At the time, Long said Marsh would bring with him a “proven track record that will assist the company’s turnaround strategy”. No reason has been given for his decision now to turn down the job.
In a trading update issued alongside the company’s statement on the end of discussions with LSL, Countrywide said it has seen a “softening” in business due to the coronavirus, but that it is “too early to assess that impact”. The company expects to publish its full-year results before the end of the month.
A spokesman for Countrywide said: “The group is seeing benefits from the turnaround plan with the continuing business returning to growth in profitability and positive mood swing in public sentiment reflected in a strong start in agreed sales which are ahead of board’s expectations and ahead of prior year.”
As of mid-morning today, the company’s shares were down almost 9% at 51p.
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