Silver Lake to buy Zoopla and PrimeLocation for $3bn

July 2018 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

July 2018 Issue

US private equity firm Silver Lake Partners is to acquire ZPG, the owner of property websites Zoopla and PrimeLocation, as well as price comparison site Uswitch, in a deal worth $3bn.

The deal will see ZPG shareholders receive 490p a share, almost a third higher than the company’s closing price on Thursday 10 May, the day before the deal was announced. The offer also represents a premium of 43 percent to the volume weighted average price per ZPG share of 343 pence for the three-month period prior to the deal announcement. Negotiations around a potential deal began in April, according to Zoopla.

The transaction has already won support from newspaper group Daily Mail & General Trust Plc, ZPG’s largest shareholder. In total, in excess of 30 percent of the company’s shareholders have backed the deal, though 75 percent of shareholders are required for the deal to proceed. Pending shareholder and regulatory approval, the transaction is expected to close in Q3 2018.

According to Paul Zwillenberg, chief executive of the Daily Mail & General Trust group (DMGT), the deal will provide a “very significant return” for the company. The sale of the group’s shares in ZPG will see it raise £640m, bringing DMGT’s total cash returns from the investment to £890m – more than 14 times the initial investment. DMGT merged its property portals Findaproperty and PrimeLocation with ZPG in 2012. Lansdowne, ZPG’s second largest shareholder, has yet to comment on the deal.

“Silver Lake is the global leader in technology investing and I am firmly of the belief that ZPG will benefit from their technology expertise and global network which will help accelerate our growth. In 2008, we transformed the property portal landscape with the introduction of a highly differentiated proposition providing data and delivering transparency to empower consumers to make smarter property decisions,” said ZPG’s founder and chief executive Alex Chesterman. “Since its IPO 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. The terms of the acquisition represent an attractive premium that recognises the quality of ZPG’s businesses and the strength of its future prospects, and allows shareholders to realise today in cash the potential future value of their holdings. I am very excited about the opportunity this offers to our employees, customers and partners as we move to the next stage of ZPG’s development and growth.”

“ZPG is a great growth technology company,” said Silver Lake managing director Simon Patterson. “It has established strong positions in property classifieds, home and financial services markets by innovating in product and marketing. We are delighted to partner with Alex Chesterman, one of Europe’s leading and most accomplished technology entrepreneurs, to invest in ZPG’s continued growth.”

Silver Lake has around $39bn in combined assets under management and committed capital. It is one of the largest technology investors in the world. The firm is focused on leveraged buyout and growth capital investments in technology, technology-enabled and related industries. Silver Lake has already made a number of property-related investments in the UK over the last few years. In March, it announced a deal with Battery Ventures to buy EDR, a real estate software company, from DMGT for $205m.

The UK real estate market is expected to attract continued attention in the coming months. With the housing market stagnating and online retailers gaining a larger share of the industry, agents and consumer-facing online companies in general are becoming attractive targets. ZPG had a £460m offer for price comparison site Gocompare.Com Group Plc rejected in January. German publisher Axel Springer made a nearly £125m investment in British online real estate agent Purplebricks.

Richard Summerfield