Rightmove, Britain’s largest property listings firm, has rejected an preliminary money and shares bid from Australia’s REA Group that valued the UK enterprise at £5.6bn.
The preliminary proposal by REA, which is managed by Rupert Murdoch’s Information Corp, values Rightmove at 705 pence a share, a 27 per cent premium to the UK firm’s share worth previous to the Australian firm’s curiosity being made public.
REA, which is working with Deutsche Financial institution, mentioned final week it was contemplating a bid for Rightmove however had but to strategy the UK firm. The indicative supply, made public on Tuesday, comprised 305p a share in money and the remainder in REA inventory which, on the time of the supply, traded at A$205.51 (US$136.84).
REA mentioned Rightmove shareholders would personal 18.6 per cent of the mixed firm based mostly on its indicative supply and that it supposed to hunt a secondary itemizing on the London Inventory Change to permit UK traders to commerce the shares.
“The proposal combines certainty of worth, in money, at a big premium to latest buying and selling whereas on the similar time giving Rightmove shareholders the chance to profit from the longer term worth creation of the mixed enterprise,” REA mentioned in a press release.
Rightmove rejected the supply on Tuesday, REA mentioned. Underneath UK takeover legal guidelines, REA has till the top of September to make a proper supply or stroll away.
Rightmove’s shares ended Tuesday at about 671p in London buying and selling. The shares have risen by a few fifth since information of the potential takeover broke. The FTSE 100 group has a market capitalisation of about £5.2bn. REA shares dipped 2 per cent to A$198.99 on Tuesday.
REA mentioned in its assertion final week that it may “apply its globally main capabilities and experience” to enhance each firms as a diversified group. Analysts have mentioned synergies present little scope provided that the 2 firms function in numerous geographies.
Siraj Ahmed, an analyst with Citi, mentioned in a analysis word this week {that a} premium of 40-50 per cent to the Rightmove worth could also be required to strike a deal.
Entcho Raykovski, an analyst with E&P, mentioned REA may look to sweeten the money element of the supply, however it was unlikely to lift the share element as this may doubtlessly dilute Information Corp’s holding within the Australian firm beneath 50 per cent.
The UK platform has an 80 per cent market share in on-line property listings however has warned of slowing buyer development. Rival OnTheMarket was acquired final 12 months by US actual property information group CoStar and has since launched an enlargement push.
Rightmove’s chief Johan Svanstrom has seemed for development in areas past its core property listings enterprise, together with mortgage companies and industrial property.
The activist investor Starboard Worth put stress on Information Corp final 12 months to separate its property companies — together with the group’s controlling stake in REA — from the media enterprise.
Starboard has since submitted a non-binding proposal that may finish Murdoch household management of Information Corp, in response to a letter despatched to the corporate’s shareholders.
Rightmove declined to remark. The main points of the REA supply have been first reported by Bloomberg.
