Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Australia’s largest property listings group REA, which is majority owned by Rupert Murdoch’s News Corp, has launched a third bid for UK rival Rightmove, valuing it at £6.1bn.
REA made the cash-and-shares offer on Sunday based on a price of 770 pence a share, almost 9 per cent higher than its initial 705p offer at the start of the month.
The company said the latest bid valued Rightmove at a near-40 per cent premium to the UK group’s share price before REA’s interest was made public.
Rightmove’s board last week rejected a second offer valuing the company at £5.9bn, calling both approaches “wholly opportunistic”.
Under UK takeover laws, REA has until the end of the month to make a formal offer or walk away. Its decision to publicise its new bid represents an attempt to put pressure on Rightmove to open talks.
“We are genuinely disappointed at the lack of engagement by Rightmove’s board and we strongly encourage the Rightmove board to engage,” said Owen Wilson, chief executive of REA.
REA argued that the UK company’s share price had “lacked any substantial upward momentum for two years”.
After rejecting REA’s first two approaches, Rightmove said on Monday that it would “carefully consider” the third proposal and urged shareholders not to take any action.
“The increased offer is clearly aimed at bringing the Rightmove board to the negotiating table,” said Entcho Raykovski, an analyst at Australian stockbroker E&P, who noted that the bid was not described as “best and final”, suggesting scope for a higher offer.
The new offer raises the cash component to 341p a share — up from 305p offered this month — with the remainder to be paid in REA stock.
That would hand 20 per cent of the enlarged company to Rightmove shareholders, with the Australian company planning a secondary listing on the London Stock Exchange as part of the takeover.
Raykovski noted that the share issue component would dilute News Corp’s stake to 49 per cent but in effect still give it control of the property listings business.
Rightmove is the dominant player in the UK’s online property listings market, but it has warned of slower growth ahead, with strong competition from US rival CoStar, which acquired UK company OnTheMarket last year.
REA, which has a A$26bn (US$18bn) market capitalisation, plans to accelerate Rightmove’s expansion into markets such as commercial property listings and real estate data to boost its growth.
The company, founded in a garage in eastern Melbourne in the 1990s, has grown to become one of the most lucrative parts of the News Corp empire since the Murdoch company invested in the business more than two decades ago.
The Rightmove approach comes as activist investors, led by Starboard Value, have increased pressure on News Corp to separate its property listings assets from the wider media operations to unlock value.
