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Silver Lake makes a $3B offer to buy property portal Zoopla, the Zillow of the UK

Ingrid Lunden
The UK housing market cooled down on the heels of the EU/Brexit referendum

The UK housing market cooled down on the heels of the EU/Brexit referendum vote, but that hasn't stopped M&A activity around property market companies. Property portal Zoopla -- a leader in the UK market with 50 million visits across its apps and sites, and 25,000 business partners integrated with its platform -- has announced that Silver Lake has made a cash offer of 490 pence per share for the company, equivalent to about £2.2 billion ($3 billion at current rates).

The figure represents a doubling of the company's valuation since it went public in 2014 at a valuation of $1.5 billion (it trades as ZPG on the London Stock Exchange). It's also a 30 percent premium on the company's last closing price.

Zoopla will still have to put the offer to the vote of shareholders and meet other regulatory approvals before the deal is sealed. So far, the company directors -- led by CEO Alex Chesterman, who founded the company in 2007 -- and significant shareholder DMGT (the Daily Mail group), which owns about 30 percent of Zoopla -- have both endorsed the offer.

"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," Chesterman said in a statement. "The terms of the Acquisition represent an attractive premium that recognises the quality of ZPG's businesses and the strength of its future prospects and allows shareholders to realise today in cash the potential future value of their holdings. I am very excited about the opportunity this offers to our employees, customers and partners as we move to the next stage of ZPG's development and growth."

Zoopla said that Silver Lake first entered negotiations with it on April 16. The two parties kept the deal very quiet. There was a surge in Zillow's share price last week, although this might have been due to the company selling the Australian division of one of its analytics subsidiaries, Hometrack, to Australian group REA for £71 million.

In its acquisition offer announcement, Zoopla did not provide any updated figures on its financials. It is due to report half-year results on May 23. In fiscal year 2017, Zoopla reported £244.5 million ($331 million) in revenues, up 24 percent on the year before, with £37.4 ($51 million) million in profit.

As a point of comparison, this puts Zoopla at a just over a quarter of the size of its similarly-named US counterpart Zillow, which this week reported revenues of $299.9 million for the previous quarter. The US company has a market cap of $7.32 billion and is trading slightly up before the market opens.

Zoopla is one of the biggest property portals in the UK, with several other brands including uSwitch, Money, PrimeLocation and SmartNewHomes under its wing.

Competing against the likes of Rightmove, the company grew quickly by tapping into the UK house-buying and selling boom, particularly in London and the southeast, and by the huge shift that we've seen in the property market, where people start their initial searches both for homes -- and to figure out the many other aspects of moving (such as what you can afford, purchasing insurance, finding mortgages and more) -- online.

Like Zillow in the US, Zoopla's primary business lies in providing a portal where people can search for homes and commercial property to buy or rent in the UK and abroad. It gets a cut on referrals and for providing service to real estate agents, who use the service to help their properties get more visibility. 

In addition to this, the company offers other property related services such as valuation calculators, property market analytics and other business intelligence tools for those in the property industry, such as business leads. Other brands in this second category include Hometrack, Calcasa, TechnicWeb, Ravensworth, Alto, Jupix, ExpertAgent, PropertyFile and MoveIT.