ZPG PLC FTSE 250-listed ZPG (>> ZPG PLC) made an unsolicited 110 pence-per-share proposal in stock-and-cash on Nov. 8, valuing GoCompare at 460 million pounds. GoCompare rejected the offer, saying it undervalued the business.
The GoCompare shareholder, who declined to be identified, told Reuters on Thursday that a deal with rival ZPG "will provide good synergies not available to either company on a standalone basis".
The shareholder said that an offer valuing GoCompare at about 125 pence per share should receive an encouraging reaction from the company's board. ZPG made an initial approach in May that was for an all-stock deal also worth 110 pence per share.
"The board of GoCo should react positively to a primarily paper offer in the region of 125 pence", the shareholder said, adding that this price represented "a clear premium" to the level at which GoCompare chairman Peter Wood recently sold stock and also reflected "a fair change of control valuation".
Furthermore, offering mainly shares would allow GoCompare investors to "benefit from a rising Zoopla share price post the deal closing", the shareholder added.
ZPG, which already owns price comparison businesses Money.co.uk and uSwitch as well as the Zoopla property portal, is seeking to add GoCompare, a smaller rival that focuses mainly on insurance products which was demerged from Esure last year.
ZPG's attempt to expand its price comparison operations comes as the websites have grown in popularity in Britain as consumers increasingly shop around for the best deals. Competing websites are run by Moneysupermarket.com Group and BGL, which owns Comparethemarket.com.
Last month, GoCompare chairman Wood sold 21.3m shares in the company at 100 pence apiece, although he remains its biggest investor with a stake of around 25 percent. He this week described ZPG's 110 pence proposal as "highly opportunistic".
GoCompare stock was down 1 percent at 103.5 pence at 1550 GMT in London. The company declined to comment on the shareholder's remarks.
(Reporting by Ben Martin; Editing by Elaine Hardcastle)
By Ben Martin
