British company GoCompare <GOGO.L> has rejected a 460 million-pound ($600 million) takeover approach made by rival ZPG (>> ZPG PLC), owner of the real estate website Zoopla and utility price comparisons website uSwitch.
GoCompare, which only debuted on the London stock market a year ago following its demerger from insurer Esure (>> Esure Group PLC), said on Tuesday that it had "unanimously and unequivocally" rejected the unsolicited 110 pence-per-share cash and stock proposal from bigger rival ZPG because it "does not reflect the strong growth prospects of the company".
"ZPG's proposal is highly opportunistic and fundamentally undervalues the company and its prospects," Sir Peter Wood, GoCompare’s chairman, said of the approach, which was made on Nov. 8.
ZPG also made an all-shares bid on May 26 that had been pitched at the same price and was spurned on the same grounds, the insurance-focused price comparison firm disclosed.
Since that earlier approach GoCompare has published half-year results that were "ahead of expectations", it added. The company posted a 1.7 percent rise in pre-tax profit to 14.7 million pounds for the six months to the end of June.
Price comparison websites operated by GoCompare, Moneysupermarket.com (>> Moneysupermarket.com Group), and BGL’s Comparethemarket, have become increasingly popular as consumers look to shop around for the most attractive deals on products and services.
A deal for GoCompare, which is known in Britain for its opera-themed Gio Compario television adverts, would expand ZPG's price comparison operations that already include Money.co.uk, which it bought in September, and uSwitch.
GoCompare shares jumped 10 percent to 102 pence on news of the approach, while shares in the Zoopla-owner edged up 0.4 percent to 338 pence, valuing it at about 1.5 billion pounds.
ZPG's offer was lower than the 110.5 pence level at which GoCompare's shares closed on Oct. 11 and came at just a 16 percent premium to the closing price on the day before the latest proposal was received, GoCompare said.
ZPG, which is being advised by Credit Suisse and Jefferies, said it was "considering its position" and, under Britain's Takeover Code rules has until 5pm on December 12 to make a firm offer or walk away.
GoCompare is working with advisers from Deutsche Bank.
British entrepreneur Alex Chesterman founded Zoopla a decade ago and is chief executive of FTSE 250-listed parent ZPG. GoCompare was set up in 2006 and Esure, which was founded by Wood, took full control of the business in 2015.
(Reporting by Ben Martin in London and Sanjeeban Sarkar in BengaluruEditing by Jane Merriman, Greg Mahlich)
By Ben Martin and Sanjeeban Sarkar