By Ben Dummett
LONDON -- U.S. buyout giant Silver Lake Friday struck at GBP2.2 billion ($2.98 billion) deal to acquire one of Britain's biggest internet property search companies, a bet on the increasing use of the web by consumers and real-estate agents as a more efficient and cheaper way to buy and sell homes in the U.K. and beyond.
Founded in 2008, ZPG PLC's brands include Zoopla, a property portal with hundreds of thousands of home listings, and uSwitch, which allows consumers to compare prices for a range of home services including gas, electricity and broadband internet. The London-based company grew profit by 2% to GBP37.4 million for the fiscal year ended Sept. 30, 2017 from the prior period, while revenue jumped 24% to GBP244.5 million.
A backer in Broadcom Ltd.'s failed $105 billion bid to acquire rival chip maker Qualcomm Inc., Silver Lake, is known as one of the biggest players in technology investing. It has agreed to pay 490 pence a share in cash for each ZPG share, a hefty 31% premium to the search company's closing price Thursday and 24% premium to ZPG's all-time closing high in March 2017.
In London trading Friday, ZPG was trading up 30.4% at 489.4 pence per share, in line with the bid.
"The deal...allows shareholders to realize today in cash the potential future value of their holdings," Alex Chesterman, founder and chief executive of ZPG, said.
The growth of other online real estate businesses underscores ZPG's appeal. News Corp., which publishes The Wall Street Journal, reported Thursday that its digital-real-estate business posted a 27% year-over-year jump in revenue for the quarter ending in March to $279 million. The division's earnings before interest, taxes, depreciation and amortization rose 17%.
Though well established in the U.K. market, ZPG faces competition from rivals Rightmove PLC and OntheMarket PLC. By taking ZPG private, Silver Lake is betting that ZPG will have more freedom to absorb any short-term earnings hit as it seeks to remain competitive and expand both domestically and into other countries by investing in new products and through acquisitions.
Both Rightmove and OntheMarket were trading higher Friday in London, as investors bet the Silver Lake deal could spur further consolidation in the U.K. online property sector.
ZPG "will need to make significant investments over the medium- to long-term in its products, technology and services to support sales growth in increasingly competitive and price-sensitive markets," Silver Lake said in a statement. Such moves "would likely be difficult to implement in the context of delivering consistent financial results to the public markets as a listed company," the buyout firm said.
ZPG said its directors intend to unanimously recommend the offer to shareholders. Daily Mail & General Trust PLC, which owns a 30% stake in ZPG, said it agreed to vote in favor of the deal, bringing Silver Lake's current backing to 31%. The offer is subject to approval from a majority of 75% of shareholders.
If approved, ZPG would continue to operate as a standalone company, but Silver Lake said it would apply to cancel the company's listing on the London Stock Exchange.
--Adam Clark contributed to this article