The Rupert Murdoch-backed real estate company REA Group has abandoned its attempt to take over the website Rightmove after its fourth offer was rebuffed on Monday.
The Australian group majority owned by Murdoch’s News Corp announced on Monday that it had decided not to make a formal bid, hours after Rightmove’s board rejected its £6.2bn proposal made on Friday.
REA told the City it was withdrawing its possible offer, having failed to win over the UK property portal’s board.
In a statement to the London stock market, REA said it had hoped to create a “global and diversified digital property company”, with market-leading positions in Australia and the UK.
News Corp had hoped to bolt a successful property company on to its UK operations and the strongly cash generative Rightmove could have worked as a cash cow to support the Murdoch’s media businesses.
However, Robert Thomson, the chief executive of News Corp, said the media group “strongly supports” the decision to withdraw.
“We applaud REA’s financial discipline as it is foolhardy to overpay for an asset, even if it patently had positive potential,” he said. “Financial discipline has been at the heart of the transformation of News Corp, and our recent successful acquisitions for Dow Jones and HarperCollins reflect that core principle.”
In 2001, Rupert Murdoch’s son Lachlan took control of REA, buying a 44% stake in the struggling Australian property company for A$2m (£1.3m). Since the Murdochs sold some of their media crown jewels and Rupert retired from the leadership of the rest last year, the property company has taken on greater importance for News Corp and is seen as one of Lachlan’s main contributions to the family’s wealth.
REA Group grew its net profits by 24% in the last financial year as a result of price increases that have meant Australians pay the most in the world to sell their homes online.
“Thanks to Lachlan Murdoch’s savvy investment in REA, digital property has become an important engine of growth at News Corp,” Thomson said. “As for Rightmove, we wish them well in an increasingly competitive British market – unfortunately, the company’s board did not make the right move.”
Owen Wilson, the chief executive of REA, said the company had decided to remain “financially disciplined”, and would now focus on “the many other opportunities ahead of us”.
He said: “Against a backdrop of intensifying global competition, we approached Rightmove’s board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders.
“We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us.”
Wilson added that REA had a strategy to expand in its core business, and that India was an “exceptional opportunity for growth”.
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REA chose to walk away five hours before a “put up or shut up” deadline to either make a firm offer or walk away for six months. Earlier on Monday, Rightmove rejected the Australian company’s fourth offer, and said that if it wished to make a fifth, then it should make a “best and final proposal” before the 5pm cutoff.
“The board of Rightmove has fully reviewed the latest proposal with its financial and legal advisers,” it said. “The board has concluded that the latest proposal remains unattractive and continues to materially undervalue Rightmove and its future prospects and that the board cannot recommend the latest proposal to Rightmove shareholders.”
The now-rejected cash and share offer valued each Rightmove share at 780p, and the entire company, which is listed on the FTSE 100 share index, at about £6.2bn.
Shares in Rightmove tumbled by 8% as news of REA’s move broke, down to 614p. They had been worth 555p before news of REA’s initial interest was revealed in the press at the end of August.
Rightmove also rejected REA’s claim that it had failed to engage with its offers. The board said its chair, Andrew Fisher, had met Hamish McLennan, the chair of REA, in person to discuss the fourth offer.
Rightmove had refused to accede to REA’s request for an extension to the “put up or shut up” deadline and had also declined to allow the Australian company access to “due diligence information” so it could consider a potential fifth proposal.
