UK’s largest estate agency group Countrywide reveals it is in takeover sights of rival Connells

Its plan for a share placing at a price of 135p would have given Alchemy between 50% and 67% of the group. Countrywide also held merger talks earlier this year with LSL Property Services, which owns brands including Marsh & Parsons and Your Move.

The company has 850 branches in the UK, with its services also covering mortgages, conveyancing and surveying.

It said: “The approach is at an early stage and Connells has indicated that any offer is conditional upon, amongst other things, completion of confirmatory due diligence and the recommendation of the board of Countrywide.”

Connells said Countrywide needed a new management team and strategy in order to reverse the performance of a business that has lost over £500 million in the last three years.

It added: “Connells also believes that significant and sustained investment is required in Countrywide's technology, network and people to put the business back on a solid footing in a challenging market.”

The proposed offer from Connells represented a 72% premium on the undisturbed Countrywide share price prior to today's announcement. Shares were 58p higher at 203p this morning.

Numis Securities said the premium offered by Connells looked more attractive than the Alchemy offer, which would have left shareholders as minority owners. The broker added: “We will wait to see if Alchemy returns with a counter offer, although the premium offered by Connells makes it look unlikely.”