Rightmove rejects ‘opportunistic’ offer from Australian rival

Rightmove has rejected a indicative £5.6 billion cash and shares offer from an Australian property company.
The board of the property website, the go-to portal for those looking to move home in Britain, said the offer from Rea Group was “wholly opportunistic and fundamentally undervalued Rightmove and its future prospects”.
The proposal included 304p in cash and 0.0381 new Rea Group shares. Rightmove said that based on the closing price of Rea on Tuesday, this implied an offer value of 698p, a premium of 26 per to Rightmove’s closing price on August 30, the last trading day before Rea announced it was interested in making a possible offer. Shares in Rightmove were up by 1¾p, or 0.3 per cent, to 672½p in lunchtime trading on Wednesday.
Rea, which is 61 per cent-owned by News Corp, the publisher of The Times, indicated its interest on September 2 after news of the possible takeover was revealed in the Australian Financial Review’s Street Talk column.
At the time, it said it was considering a possible cash-and-shares offer for Rightmove but that it had not approached, nor had any discussions with, the British company regarding any potential offer.
Rea, which was founded in 1995 and has a market capitalisation of A$26 billion (£13 billion), said it had made its indicative offer to the Rightmove board on September 5. The Melbourne-based group intends to apply for a secondary listing of all of its ordinary shares in London, which would enable trading in its shares on both the London Stock Exchange and the Australian Securities Exchange.
“This 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,” the company said.
Under the City’s takeover code, Rea has until 5pm on September 30 to make a firm offer or walk away.
Rightmove has an 86 per cent share of the house search market in the UK. It has high margins: for every £1 spent by estate agents and developers with Rightmove, it made 69p of profit in the first half. About 19,000 estate agents and developers advertise on the portal.
Sean Kealy, an analyst at Panmure Liberum, the broker, has said that Rightmove’s investors should expect a premium of up to 60 per cent for their shares in the FTSE 100 company, given its dominant position in the UK market.
Rightmove’s shares have underperformed the market over the past year amid fears that it could face increased competition from OnTheMarket, a rival that was acquired by CoStar, the American property group, for £99 million towards the end of last year.