Silver Lake – which also has investments in Tesla and Alibaba – is paying a “generous” 490p for each ZPG share, valuing the company at £2.2bn.
A rival bid?
Some in the City are speculating that this deal is far from done though, with rumours circulating that ZPG might be the subject of a rival offer.
“The question now is whether there is a counter-bid,” wrote Liberum analyst Ian Whittaker in a note to clients.
“If there is one, we think the most likely candidate is Axel Springer, which has a collection of online property classified assets throughout assets but nothing in the UK, although - interestingly - they recently took a stake in Purplebricks.”
With Zoopla shares climbing 30% to 389.6p – just below the offer price – it would suggest the market doesn’t necessarily agree that another offer will be forthcoming.
RBC expects the deal go through as well given that DMGT, ZPG's largest shareholder, has already thrown its weight behind the bid.
Expect more consolidation
Shares in other internet property portals also surged this morning, as analysts suggested there could be some more consolidation in the sector over the coming months.
They point out that there are a lot of companies popping up in the space right now, largely because of the relatively low barriers to entry.
However, the analysts say that the barriers to success are actually quite high – only one or two tend to make it big – which means there is likely to be some more merger and acquisition activity.
Rightmove ‘looking over its shoulder’
In its statement today, Silver Lake said it had identified “potential targets” both at home and abroad which it believes would help ZPG to grow – another boon for some of the industry’s smaller players.
The private equity firm said it would also make “significant investments” in ZPG’s products and technology.
Should Silver Lake achieve the kind of growth it is talking about, it would likely put ZPG firmly in the rear-view mirror of Rightmove which, at £4.4bn, is currently twice the size of ZPG.
“Zoopla itself is the number two outfit in the property site space behind Rightmove,” said AJ Bell investment director Russ Mould.
“The latter will be watching Silver Lake’s intentions for Zoopla and whether it intends to launch a more concerted challenge to its market leader status.”