United States real estate information provider CoStar clearly liked what it saw when it looked under the bonnet at Domain Holdings, making an agreed offer that has won the ascent of the digital real estate company’s parent company, Nine Entertainment.
Domain said it had entered into a binding Scheme Implementation Deed for CoStar to buy the 83.1% of Domain it does not already own by way of a Scheme of Arrangement, taking it private after eight years on the Australian Securities Exchange (ASX), if approved by shareholders.
The offer of $4.43 per share, less any special dividend declared or paid after today, values Domain at an implied enterprise value of A$3.0 billion (US$1.92 billion).
The Domain Board has unanimously recommended that shareholders vote in favour of the Scheme, without a superior proposal, and subject to an Independent Expert concluding it is in the best interests of shareholders.
Nine, which owns 60% of Domain, has advised Domain it will vote in favour of the Scheme at a shareholders' meeting in mid-August, subject to the same conditions as the Board made.
The offer was at a premium of 42.0% to the ‘undisturbed’ share price of $3.12 per share before CoStar made its initial offer on 21 February, 50.2% to the one-month volume weighted average price (VWAP) and 59.7% to the three-month VWAP, up to 20 February.
Domain Chair and Non-Executive Director Nick Falloon said the Board believed the proposal represented compelling value and a high degree of certainty for Domain shareholders, through the cash offer and limited conditionality.
“This proposal is an endorsement of the strong fundamentals of Domain, and we are confident this position will be further strengthened with CoStar’s support,” Falloon said in announcement to the ASX.
CoStar had entered into an exclusivity deed with Domain on 31 March, which gave it access to a virtual data room to determine if it wanted to proceed with a binding offer, which was confirmed with the announcement today.
The Domain Board is permitted to pay a fully franked special dividend of up to 10 cents before the implementation of the Scheme, with the size dependent on the franking credits available.
The Scheme is also subject to other conditions including court and Foreign Investment Review Board approval.
At the time of writing Domain (ASX: DHG) shares were trading 12 cents (2.94%) higher at $4.38, valuing the company at $2.76 billion, after trading between $4.34 and $4.47.
Established by newspaper publisher Fairfax Media in 1999, Domain listed on the Australian Securities Exchange (ASX) in 2017 with Nine Entertainment retaining a 60% ownership stake in Domain after Nine’s merger with Fairfax in 2018.
