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The fourth time wasn’t a charm for REA Group, which announced Monday it will end its month-long quest to buy Rightmove after the board of directors of the UK portal quashed an $8.3 billion bid from the Sydney-based News Corp. subsidiary.
In pulling away, REA Group said Monday its offers were competitive considering that, despite a share buyback program, “Rightmove’s share price has lacked any sustained upward momentum for two years.” The deal would have strengthened both brands’ positions in their markets and provided the portal with capital and technical capabilities needed to accelerate its growth, REA officials added.
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Owen Wilson | Credit: LinkedIn
“Against a backdrop of intensifying global competition, we approached Rightmove’s Board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders,” REA Group CEO Owen Wilson said in a statement. “We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us.”
“We are always financially disciplined when we look at [mergers and acquisitions] and reinvestment in our business and will continue to focus on the many other opportunities ahead of us,” Wilson added. “Our recent investment in Athena Home Loans is a great example of this.”
“We have a clear strategy to expand in our core business and adjacent markets, and India represents an exceptional opportunity for growth,” he added. “We look forward to pursuing these opportunities and generating further value for REA shareholders.”
Despite REA Group increasing its offer by nearly $1 billion from Sept. 3, Rightmove Chairman Andrew Fisher said the News Corp. subsidiary’s offers continued to be “unattractive” and “materially undervalued” even after two in-person meetings with REA Group’s board of directors to talk about the terms for a fifth offer.
Andrew Fisher | Credit: Rightmove
“No information was presented in either meeting which was materially new or different to the information which has been previously presented publicly by REA,” the announcement read. “Furthermore, nothing was presented in either meeting which materially changed the Board’s view of the Latest Proposal.”
Rightmove said its business model has proven to be robust through multiple market shifts, with the company well-positioned to yield long-term growth and profitability. The board said it’s confident in the company’s current leadership team and has no desire to sell the business, given Rightmove’s position as the No.1 residential portal in the UK.
“We respect REA and the success they have achieved in their domestic market. However, we remain confident in the standalone future of Rightmove,” Fisher said in a written statement. “Rightmove has been the leading operator in the UK for over 20 years, and it has differentiated market presence, branding and technology, and very significant opportunities for future growth.”
“The last few weeks have been very disruptive, as well as unsettling for our colleagues,” he added. “… Our world-class team is executing against our strategic plan, and continuing to drive innovation and accelerate growth to deliver compelling shareholder value.”
Rightmove’s decision closes the door — at least for now — on News Corp’s plans to compete with rival CoStar Group on an international scale, as CoStar purchased Rightmove rival OnTheMarket for about $126 million in December. However, News Corp. CEO Robert Thomson remains unshaken, noting that Rightmove may come to regret its decision.
“Financial discipline has been at the heart of the transformation of News Corp and our recent successful acquisitions for Dow Jones and HarperCollins reflect that core principle,” he said in a statement to The Guardian. “Thanks to Lachlan Murdoch’s savvy investment in REA, digital property has become an important engine of growth at News Corp.”
“We have no doubt that REA will continue to successfully expand into auspicious adjacencies and are excited by their progress in India, where the company is now the market leader and benefitting from the express economic growth in the world’s largest country,” he added. “As for Rightmove, we wish them well in an increasingly competitive British market – unfortunately, the company’s Board did not make the right move.”
