Jan. 26 (Bloomberg) -- Shareholders of Countrywide Plc, the U.K.'s largest residential real estate broker, rejected 3i Group Plc's 1.02 billion pound ($2 billion) bid after some investors said it was too low.

The cash-and-share offer got 58 percent of the votes cast at a shareholder meeting in London, Countrywide said in a statement today. 3i, Europe's biggest publicly traded buyout firm, needed 75 percent of the votes to buy Countrywide, based in Witham, Essex. The offer has now lapsed.

``We are disappointed by the outcome,'' Countrywide Chairman Christopher Sporborg said after the vote. ``There are issues that have been raised for where we find ourselves now, and these will be looked at. Our overriding priority is to ensure that the business remains in good shape and able to execute its stated strategy.''

Today's meeting was delayed by almost two weeks to give 3i more time to rally votes for the bid. Still, investor support for 3i's bid was 6 percentage points lower today than on Jan. 15, when the original meeting was postponed.

3i had 11 million more votes in favor than on Jan. 15, while the opponents gathered an additional 14 million votes, according to Countrywide's statements.

`Hugely Disappointed'

``We are hugely disappointed,'' Peter Gordon, a partner in 3i's buyout team in London, said after the vote. ``Perhaps there has been a paradigm shift, there are people out there who think the company is considerably more valuable than has been thought until now.''

Three investors owning about 17 percent of Countrywide said this month that the offer doesn't reflect the U.K.'s booming property market. House prices rose 13.5 percent in the year ended Jan. 13 as bankers spent bonuses on London homes and country retreats, according to Rightmove Plc.

Countrywide's shares rose 11.5 pence, or 2.2 percent, to 536.5 pence in London, valuing the company at 962 million pounds.

3i's refusal to increase its offer is ``evidence of strong investment discipline,'' said Bill Barnard, an analyst at Dresdner Kleinwort Wasserstein in London, before today's meeting. Barnard has a ``buy'' rating on the stock.

Artisan Partners LP, which owns 8.5 percent of Countrywide, is among three shareholders that opposed the offer before the original vote was postponed. The others are Boussard & Gavaudan Asset Management LP, which has 5.1 percent of the stock, and Standard Life Plc, owner of a 3.2 percent stake.

``It is pleasing that a significant number of Countrywide shareholders share our view that the offer did not represent the full value of the company,'' Euan Stirling, an investment director at Standard Life's fund unit, said in a statement.

Rising Revenue

Countrywide's 2006 pretax profit before one-time items beat analysts' estimates, it said this month. The operator of 1,177 branches said revenue rose 85 percent to 33.6 million pounds. Countrywide will report its 2006 results on March 13, it said today.

3i offered 490 pence a share in cash and almost 0.17 of a share in Rightmove Plc, the U.K.'s largest property Web site, for each Countrywide share. Countrywide owns 21 percent of Rightmove.

Countrywide will review its Rightmove holding as well as consider borrowing money to return cash to shareholders, said Sporborg. He wouldn't comment on whether managers, led by Harry Hill, who had backed the buyout, would stay with the company following the failure of the bid. Sporborg had been due to retire on Dec. 31.

Barely Moved

Since the bid was announced Dec. 12, Countrywide's shares had barely moved until today's announcement. Rightmove stock has climbed 30 percent after rising 2.5 pence today to 479 pence.

3i's shares, which yesterday closed at their highest in more than five years, fell 15 pence, or 1.4 percent, to 1080 pence. In November, 3i raised 5 billion euros for its largest leveraged buyout fund. The firm plans to spend the money buying about 50 European companies over the next four years.

3i's takeovers of public companies include Chorion Plc, the U.K. producer of Agatha Christie television dramas. The firm has also been part of groups that have taken private AWG Plc, owner of Anglian Water, and Associated British Ports Holdings Plc, Britain's biggest ports operator.

Private-equity firms spent 5.1 billion pounds on acquisitions of publicly traded U.K. companies last year, a drop of 29 percent from 2005, according to a survey by the Centre for Management Buy- out Research. Permira Advisers LLP, Europe's biggest leveraged buyout firm, failed in five successive attempts to buy such companies.

To contact the reporters on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net; Simon Packard in London at packard@bloomberg.net.

Last Updated: January 26, 2007 11:52 EST