ZPG, owner of the some of the UK's leading property websites, has been sold to Californian based Equity firm Silver Lake for £2.2bn. 490p per share was agreed to take ZPG's valuation to £2.2bn, a 30% increase of its trading stock price. This adds to the Investment portfolio for the US tech firm, which includes companies such as Alibaba, Godaddy and Tesla.
ZPG has grown at an incredible rate over the past 10 years. Starting originally as Zoopla back in 2008, the company has made numerous strategic acquisitions:
July 2009 – Acquired Think Property from Guardian Media group.
August 2009 - Acquired Propertyfinder.com + HotProperty .com
Jan 2011 – Acquired Houseprices.co.uk
October 2011 – Merged with Digital Property Group (Owner of Primelocation)
May 2012 - Acquired Upmystreet.com
July 2012 - Merged with DMGT's property website assets, with DMGT owning 55% of the business.
May 2015 – Acquired uSwitch
Jan 2017 – Acquired Hometrack
Who Will Financially Profit?
Alex Chesterman (ZPG CEO)
Alex Chesterman, the founder of Zoopla, is said to earn around £61m from the deal. The market value of Mr Chesterman's shares was £22m, however, the options he had within the shares almost tripled their value.
Mr Chesterman, after graduating from University College London (UCL), turned down a banking job with Wall Street banking powerhouse Goldman Sach's, for a job at the Planet Hollywood restaurant chain.
However, this is not the first time he has had a successful exit from a company. After merging his DVD rental business "Screen Select" with LoveFilm, LoveFilm was sold for 200m to Amazon in 2011.
With regards to the takeover, Mr. Chesterman said "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 "
"I am very excited about the opportunities this offers to our employees, customers and partners as we move to the next stage of ZPG's development and growth."
It was confirmed at the weekend that Chesterman will stay on as the Chief Exec of ZPG.
Daily Mail and The General Trust (DMGT)
DMGT are set to receive £640m from the deal, taking it's total returns from their investment to around £8890m, a whopping 14 times increase on their initial investment. They would have to sell a fair few newspapers to generate this kind of money from publishing alone, even if they are the Uk's second bestselling newspaper.
A Good Investment?
ZPG's pre tax profits were just £37.4m in 2017 and shares at the time of acquisition were trading at around 114.8p per share, 30.6% lower than the 490p price per share that Silver Lake paid. Silver Lake themselves admitted they were paying the "full price" for the business.
Despite this, Silver Lake has strong reasoning behind their investment (I should think so for £2.2bn!). " ZPG is a great growth technology company" said Simon Patteron, the 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 ZPC's continued growth."
Interestingly, today's property portal shares shot up massively following the news. Share prices have gone up from 114.8p to 490p. Amazingly, this is the exact figure that Silver Lake paid for the shares and the premium payment gap has been closed (for now anyway).
The Same Old Story....
ZPG, who have attracted comments over the years such as the "Amazon of housing" is added to a list of British Tech companies who have sold out to Larger US rivals before they have reached their full potential.
British tech companies are frequently accused of "selling out to the US" with many believing they should "stick it out in the UK". After earning £61m and staying on as Chief exec, I think this is the last thing on Mr Chesterman's mind.