The company behind the UK property sites Zoopla and PrimeLocation and the price comparison service uSwitch is being bought by a US private equity firm in a £2.2bn deal.
California-based tech investor Silver Lake, which has investments in companies including Alibaba, GoDaddy and Tesla, has agreed a 490p a share bid for parent company ZPG. The bid, which values the business at £2.2bn, is almost a third higher than ZPG’s closing price on Thursday.
The deal has been backed by more than 31% of investors including ZPG’s largest investor DMGT, the parent company of the Daily Mail, which is in line for a £640m pay day from the sale of its 29.9% stake.
Alex Chesterman, the Zoopla founder and chief executive, is in line to make about £60m from the sale of the 12.5m shares he has in the business.
It marks the latest successful exit of a business for serial entrepreneur Chesterman, who set up Zoopla in 2007 a year after he merged his online DVD rental business ScreenSelect with LoveFilm. LoveFilm was then sold to Amazon in 2011 for £200m.
“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,” said Chesterman. “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, which made a £1bn stock market flotation in 2014, is being taken over six months after its £460m bid for rival GoCompare was rejected. Shares in ZPG, which acquired uSwitch in 2015 for £190m, jumped by more than 30% in early trading, while rival Rightmove rose by 5%.
The deal has been agreed by ZPG’s board but Silver Lake, which last year raised a $15bn (£11bn) fund to back a new round of tech deals, needs to gain approval from 75% of the company’s shareholders..
“ZPG is a great growth technology company,” said Simon Patterson, managing director of Silver Lake. “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 said it did not expect to make any material headcount reductions following the completion of the deal and that it would preserve ZPG’s existing management team, brand and culture to ensure continuity.
Westhorpe, a subsidiary of Singaporean sovereign wealth fund GIC, and Canadian pension fund PSP will also take a minority stake by co-investing in ZPG with Silver Lake.
Before Zoopla, Chesterman set up Bagelmania, a chain of bagel bars, and has invested in British start-ups including Graze, Secret Escapes and Farmdrop. He received an OBE in 2016 for services to digital entrepreneurship.
Profile of Zoopla founder
It was a parking ticket and a late fine on a video rental that turned the Zoopla founder, Alex Chesterman, into one of Britain’s most successful digital entrepreneurs.
After working for Planet Hollywood in the US in the 1990s, he set up a UK bagels and coffee chain called Bagelmania. However, when he had to pay £52 in fines returning a DVD he started an online business renting out DVDs by post. In 2003 ScreenSelect was born. It merged with smaller rival Lovefilm and become the biggest DVD rental service in Europe. It was eventually sold to Amazon for £200m in 2011.
Chesterman launched Zoopla in 2007 to simplify home buying and rentals. A £1bn stock market flotation came in 2014.
He has invested millions into other tech startups, including the snack box provider Graze, the holidays firm Secret Escapes and the farm produce distributor Farmdrop.
