Property website Zoopla is to buy the price-comparison site uSwitch in a deal worth up to £190m, bringing together two well-known UK consumer brands.
The parent company, Zoopla Property Group, which also owns PrimeLocation, is paying £160m plus a performance-based fee of up to £30m.
Shares in Zoopla jumped 14% to 210p on the news but remained below its flotation price of 220p a share. When the company made its stock market debut in June it had a market value of nearly £1bn.
Zoopla, which gets 44m visits a month, said bringing together the brands was a “natural next step” that would create a single portal where consumers could find and manage their home. Its founder and chief executive, Alex Chesterman, hailed the deal as “transformational”.
Founded in 2000, uSwitch helps consumers find the best deals for energy and broadband and generated about 50.3m online visits last year. It had revenues of £63m and adjusted profits of £16m in 2014.
Zoopla and its rival Rightmove have become the two most popular property websites over the past decade, tapping into the UK’s property obsession. However, the pair face growing competition from a recently launched website, OnTheMarket.com, which is backed by 4,500 estate agents, including Savills and Knight Frank.
It looks like Zoopla is losing out most – OnTheMarket said recently that 90% of agents using its site had dumped Zoopla rather than Rightmove. However, Zoopla released a trading statement on Thursday that showed traffic up by 11% to 265.5m in the six months to 31 March. Mobile visits were 34% up and account for nearly two-thirds of monthly visits.
USwitch’s institutional backers LDC – the private equity arm of Lloyds Banking Group which held a majority stake of 57% – and Forward Private Equity, have sold their holdings. The firm’s management, led by CEO Steve Weller, also sold its 10% stake.
LDC backed a management buyout of uSwitch in August 2013 and it is making 2.4 times its original investment of £35-40m. In the last 12 months, LDC has made £715m from exiting investments and invested a further £370m.