Connells is in talks with Countrywide to take over the struggling estate agency, surveying and property business.

It is looking to pay 250 pence per Countrywide share, which is 72 per cent above yesterday’s closing price of 145 pence per share.

Countrywide has lost over £500m pre-tax over the last three years and has been closing branches.

The board of Countrywide has admitted the firm is in urgent need of recapitalisation to reduce its net debt and lessen its exposure to its lenders.  If it cannot recapitalise, there is a risk it could end up in administration, with Countrywide shareholders losing all or a substantial portion of their investment.

Connells is carrying out due diligence to access the feasibility of making a firm offer for Countrywide. It believes that Countrywide needs a new management team, with real estate agency expertise and a new strategy to turnaround the business.

In addition, Connells says that significant investment is needed in Countrywide’s technology, network and people, which would reduce profitability and cash flow in the short and medium term.

Last month, a private equity company that specialises in investing in distressed, undervalued or underperforming businesses, Alchemy Partners, proposed to invest in Countrywide. Shareholders opposed this believing the Alchemy proposal would leave Countrywide exposed to significant ongoing risk.

In February LSL also looked at taking over Countrywide but those merger talks fell through.