Rightmove, the UK’s largest property listings company, has rebuffed a £5.6 billion (A$10.6 billion) takeover offer from Australia’s REA Group, which is controlled by Rupert Murdoch’s News Corp.
The initial proposal, valued at 705 pence per share, represented a 27% premium over Rightmove’s share price before the bid was announced.
The offer, disclosed publicly on Tuesday, included 305 pence per share in cash and the remainder in REA stock, which was trading at A$205.51 (US$136.84) at the time. REA stated that the deal would give Rightmove shareholders an 18.6% stake in the combined entity and that a secondary listing on the London Stock Exchange would be pursued to facilitate UK investor participation.
“The proposal combines certainty of value, in cash, at a significant premium to recent trading while also giving Rightmove shareholders the opportunity to benefit from the future value creation of the combined business,” REA said in a statement.
Despite this, Rightmove rejected the bid, according to REA. Under UK takeover regulations, REA now has until the end of September to either make a formal offer or withdraw its proposal.
Rightmove’s shares closed at around 671 pence on Tuesday, marking a 20% increase since news of the takeover bid emerged. The FTSE 100-listed company has a market capitalization of approximately £5.2 billion. In contrast, REA’s shares fell by 2% to A$198.99.
REA, which is collaborating with Deutsche Bank on the bid, had previously indicated that it was exploring the possibility of acquiring Rightmove. Analysts have suggested that a higher premium, potentially in the range of 40-50% above Rightmove’s current price, might be necessary to finalize a deal. Additionally, some experts believe REA could increase the cash component of the offer, though raising the share portion could dilute News Corp’s controlling stake in REA.
Rightmove, which commands an 80% market share in online property listings, has been seeking growth beyond its core business, including expansions into mortgage services and commercial property.
The activist investor Starboard Value has previously pressured News Corp to separate its property assets, including its stake in REA, from its media operations. Starboard has also submitted a non-binding proposal to end Murdoch family control of News Corp.
Rightmove declined to comment on the REA offer. The details of the bid were first reported by Bloomberg.