Rightmove Rejects REA Group’s Takeover Proposal
The London-listed Rightmove, a British company which runs the UK’s largest online real estate property portal rightmove.co.uk, has rejected a $7.33 billion takeover proposal from Australian peer REA Group, saying that it undervalued the UK property platform’s future prospects.
On September 5, REA proposed 305 pence in cash and 0.0381 new REA shares for each Rightmove share, which implied an offer value of 698 pence. This represented a 26% premium to the closing price on August 30- the last trading day before REA confirmed speculation about its intentions.
“Further to recent media speculation in relation to REA’s possible offer for Rightmove plc, REA confirms that on 5 September 2024 it made a non-binding indicative proposal to the Board of Directors of Rightmove regarding a possible cash and share offer for the entire issued and to be issued share capital of Rightmove,” REA Group said in a regulatory filing with Australian Securities Exchange (ASX) on Wednesday.
REA, which is majority-owned by the business magnate’s News Corp, also said that the company was informed on 10 September 2024 that the proposal was rejected by Rightmove Board after examining the terms with financial advisers.
Under the terms of the proposal, which REA called a highly compelling proposition, Rightmove shareholders would hold 18.6% of the enlarged company, which would be listed in both London and Sydney in a fully fungible manner.
REA’s intended move to apply for a secondary listing in the UK would “provide the opportunity for a wider pool of investors to gain exposure to a global and diversified digital property company on the London Stock Exchange,” it said.
Positive Contribution
REA claimed that a tie-up of the two firms would “positively contribute to the property market ecosystem in the UK,” while it would be able to invest more to support Rightmove to accelerate growth in certain areas.
It would also enhance customer and consumer value across the combined portfolio utilising REA’s globally leading capabilities and expertise, apply REA’s experience in investing in and growing adjacencies to support Rightmove in its ambition to accelerate expansion in these areas, while minimising execution risk, benefit from knowledge transfer, leading technical capabilities as well as support from targeted investment and innovation in a competitive market.
REA added: “The proposal combines certainty of value, in cash, at a significant premium to recent trading while at the same time giving Rightmove shareholders the opportunity to benefit from the future value creation of the combined business.”
Rightmove, however, urged its shareholders not to take any action, saying the proposal was “wholly opportunistic and fundamentally undervalued Rightmove and its future prospects.”
REA now has until September 30 to either announce a firm intention to make an offer or step away, though that deadline can be extended under the City Takeover Panel rules.
