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Sydney-based News Corp subsidiary REA Group is making headway in its efforts to snap up UK residential real estate portal Rightmove nearly two weeks after having its initial bid unanimously declined.
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REA Group’s first bid was a $7.32 billion cash-and-stock takeover, which the company said would provide Rightmove with the capital and technical capabilities needed to accelerate its growth. Although Rightmove’s board of directors called the initial offer “wholly opportunistic,” REA Group countered on Sept. 16 with a new bid of $7.8 billion.
That bid was also rejected, pushing REA Group to make a third offer on Monday for $8.1 billion as News Corp looks to up the ante on its competition with CoStar Group, which purchased Rightmove rival OnTheMarket for about $126 million in December.
Owen Wilson | Credit: LinkedIn
“We believe that the combination of our world-leading expertise and technology with the attractive Rightmove business will create an enhanced experience for agents, buyers and sellers of property,” REA Group CEO Owen Wilson said in a statement to the Australian Stock Exchange. “We live in a world of intensifying competition and this proposed transaction would bring together two highly complementary digital property businesses for investment and growth.”
“We have today increased our proposal to an implied value of 770 pence — it provides a combination of immediate value certainty in cash and at the same time gives Rightmove shareholders an increasing opportunity in core digital property and adjacencies where we have much expertise,” he added. “We are genuinely disappointed at the lack of engagement by Rightmove’s Board and we strongly encourage the Rightmove Board to engage.”
With an extra $780 million on the table, Rightmove Chairman Andrew Fisher said the portal’s board of directors will “will carefully consider the Increased Proposal, together with its financial advisers.”
Andrew Fisher | Credit: Rightmove
Fisher said the first two offers were “uncertain, highly opportunistic and unattractive” and failed to properly reflect Rightmove’s current and future prospects in the market.
“Rightmove is an exceptional company with a very clear strategy, a consistent track record of delivery, and a strong management team,” he said in a statement to the London Stock Exchange. “The Board is confident in the Company’s short and long-term prospects, and sees a long runway for continued shareholder value creation.”
“The Board will continue to act on behalf of our shareholders and respond to the most recent proposal in due course,” he added.
Rightmove’s stock has been on the upswing for the past month, with the price per share rising 22.40 percent to $18.36. Meanwhile, REA Group’s stock has slid 4.61 percent to $35.81 per share.
Several UK-based analysts said REA Group’s latest bid may not be its last, with Peel Hunt analyst Jessica Pok telling Market Watch that $8.1 billion is “likely still below what Rightmove’s investors will find acceptable” as Rightmove benefits from an “improving U.K. housing market.”
