US tech fund Silver Lake to snap up Zoopla owner for £2.2bn

ZPG, the owner of popular property portals Zoopla and PrimeLocation, will be acquired by US private equity firm Silver Lake for 490p per share

  • By Courtney Goldsmith | Friday, May 11th, 2018

Shares in UK-based ZPG, which was founded in 2007 and owns property websites Zoopla and PrimeLocation, rocketed as much as 30 percent on announcement of the deal

US private equity firm Silver Lake has agreed to buy ZPG, the company behind property websites Zoopla and PrimeLocation, for £2.2bn ($3bn). The deal is expected to close in the third quarter of this year.

Under the terms of the deal, California-based Silver Lake will pay 490p ($6.63) per share for ZPG, a premium of 31 percent on ZPG’s closing price of 375.2p ($5.07) on May 10 and a 24 percent premium on the company’s all-time high share price, recorded in March. Shares in UK-based ZPG, which was founded in 2007 and also owns price comparison site uSwitch, rocketed as much as 30 percent on announcement of the deal.

The company’s largest shareholder, newspaper group Daily Mail and General Trust (DMGT), backed the offer with its nearly 30 percent shareholding, worth over £650m ($879.5m).

Safe as houses
Alex Chesterman, the founder and CEO of ZPG, said the company will benefit from Silver Lake’s “technology expertise” and global network, which will help drive the firm’s growth. He added that the “attractive premium” offered by Silver Lake reflected the quality of ZPG’s businesses and the strength of its future prospects.

Under the terms of the deal, California-based Silver Lake will pay 490p per share for ZPG, a premium of 31 percent on ZPG’s closing price on May 10

“Since its IPO [initial public offering] in 2014, ZPG has evolved and diversified as we have made significant progress in becoming the platform of choice for consumers and partners engaged in property and household decisions,” Chesterman said.

Simon Patterson, a managing director of Silver Lake, called ZPG a great growth technology company and referred to Chesterman as “one of Europe’s leading and most accomplished technology entrepreneurs”.

Silver Lake has around $40bn of assets under management and, in March, announced a deal to buy real estate software company EDR from DMGT for $205m.

More to come
The bid for ZPG comes just six months after Zoopla failed to acquire insurance comparison site GoCompare. GoCompare rejected ZPG’s £460m ($622.4m) takeover offer, saying it fundamentally undervalued the company and its prospects.

According to Bloomberg, analysts at Barclays said the ZPG deal was a “clear positive” for DMGT, as the hundreds of millions in proceeds could clear the company’s debt for the year.

While industry observers have predicted a rise in mergers and acquisitions (M&As) in traditional UK estate agents – due to a stagnant housing market and the rise in online firms – analysts at Investec were surprised the deal involved fast-growing property tech firm Zoopla.

“We had expected ZPG to continue to execute its M&A strategy, but had not expected a bid for ZPG itself,” Investec analysts told Reuters.

The classifieds sector was also boosted by the deal, with shares in Zoopla rival Rightmove and automotive firm Auto Trader both rising over the prospect of more M&As.