In a major move set to reshape the UK property listings market, Australia’s largest property listings group, REA, has made a third takeover bid for its UK rival, Rightmove, valuing the company at £6.1 billion. This cash-and-shares offer, backed by Rupert Murdoch’s News Corp, represents an increase from REA’s previous bids, signalling the seriousness of its intentions. The latest offer values Rightmove at 770 pence per share, nearly 9% higher than its previous 705 pence offer. It also placed a near 40% premium on Rightmove’s stock price before REA’s interest became public.
Key Details of the Offer
REA’s bid raises the cash component to 341 pence per share, while the remainder will be paid in REA stock. Should the offer succeed, Rightmove shareholders would own 20% of the enlarged company. Additionally, REA has outlined plans for a secondary listing on the London Stock Exchange, further expanding its presence in the UK market. While the Rightmove board previously rejected a second £5.9 billion offer, describing both bids as “wholly opportunistic,” REA has until the end of the month to make a formal offer or walk away, as required by UK takeover laws.
Short-term Implications
REA’s decision to publicise the latest offer is seen as a strategic move to pressure the Rightmove board to engage in talks. The revised bid highlights REA’s commitment to the deal, but it also leaves room for negotiation, as the offer is not described as “best and final.” Analysts believe that this leaves scope for an even higher bid if necessary. With the proposed merger, Rightmove shareholders would not only receive a substantial payout but would also gain a significant stake in a larger global entity
Long-term Implications
For REA, the acquisition of Rightmove presents an opportunity to accelerate the latter’s growth, particularly in sectors such as commercial property listings and real estate data. Rightmove has been the dominant player in the UK market, but competition has increased, particularly from US rival CoStar, which acquired OnTheMarket last year. By merging with Rightmove, REA could leverage its resources and expertise to fend off these growing competitive pressures. Additionally, the merger would strengthen REA’s global portfolio, further solidifying its position as one of the most lucrative arms of the News Corp empire
Associated Risks
There are notable risks associated with the deal. For Rightmove, merging with REA could dilute its UK-focused strategy and put pressure on its profit margins, which have historically been strong. Additionally, the deal could face regulatory scrutiny due to the scale of the merger, particularly given REA’s dominant market position in Australia and its growing influence in the UK. For REA, integrating Rightmove’s operations into its global business could present operational challenges, particularly as it seeks to expand into new markets like commercial property listings. Furthermore, diluting News Corp’s stake in REA to 49% could potentially lead to governance issues down the line.
Overall, while the takeover bid presents significant growth opportunities for both companies, it also comes with inherent risks that both sides will need to carefully consider. The coming weeks will be crucial as REA pushes for engagement with Rightmove’s board and potentially increases its offer to secure the deal.
