Credit crunch cited as reason for collapse of £800m deal

Towergate has pulled out of sale talks with private equity firm Candover due to difficulties relating to the credit crunch, according to reports.

The Sunday Telegraph said that Chairman Peter Cullum's plans to sell a twenty-five per cent stake of the £3bn-valued business for £800m had been abandoned. The report said that talks had broken down as a result of a dispute over the projected earnings of the group.

A source close the negotiations, however, said that "the current state of the debt markets made it impossible for Candover to meet Towergate's expectations."

In the Autumn, Towergate announced tentative plans to refinance by the end of the first quarter of this year. It was first linked to Candover, with whom Cullum has a relationship spanning fifteen years, last month.

Following the conclusion of the proposed deal, Candover was expected to exit the business within five years, either through a sale or floating the business.

It is believed that Towergate will look to find an alternative investor, ahead of changes in capital gains tax, which come into effect on 6 April - leading to many directors selling their holdings in the company.

Cullum owns about 65 per cent of Towergate. A further 22 per cent is owned by Chief executive Andy Homer, non-executive director Paul Dyer, sales and marketing director Tony Proverb and M&A director Kenny Maciver.