LONDON (Reuters) - Property consultancy DTZ Holdings DTZ.L, which is in takeover talks with a string of unnamed bidders, said the equity in its business was worth little or nothing due to its high level of debt, sending its shares plunging by about 76 percent.
“Based on the valuation of DTZ derived from proposals received to date ... and given the level of debt within DTZ, there is minimal value, if any, that may be attributed to the shares of DTZ, although the exact value is uncertain,” DTZ said in a statement on Monday.
By 0842 GMT (3:42 a.m. ET), DTZ’s shares were down 76 percent to 5 pence, while the broader index of UK property stocks .FTELUK was down 1.1 percent.
DTZ put itself up for sale last month after a deal with majority shareholder Saint George Participations and BNP Paribas, that reportedly valued the company at 162 million pounds ($260 million), fell through due to the Euro zone economic turmoil, handicapping French lenders.
There has been speculation about a takeover since May, which, combined with poor economic conditions, meant DTZ had a “varied start to the year,” the company said in a trading update in September. Net debt was about 64 million pounds at end-April.
“DTZ was quite aggressive in gearing its balance sheet so it is no surprise the equity carries limited value,” said one analyst on condition of anonymity.
“The problem it faces is the high-return part of its business is in advising on transactions and that has fallen off a cliff. It is also effectively a distressed seller,” the analyst told Reuters.
Before this morning’s announcement, DTZ’s share price had more than halved to 21 pence over the last 12 months, valuing the company at about 58.5 million pounds.
($1 = 0.624 British Pounds)
Reporting by Tom Bill; Editing by David Holmes