Rightmove to Consider REA's Sweetened $8 Billion Bid — 2nd Update

By Mike Cherney and Dominic Chopping

Rightmove said it would consider a sweetened 6 billion pound ($7.99 billion) bid from News Corp.-controlled REA Group, having already knocked back two bids from the Australian real-estate advertiser in recent weeks.

REA announced the third bid Monday, offering 341 pence in cash and 0.0422 new REA shares for each Rightmove share. The offer valued each Rightmove share at 770 pence based on REA's closing share price on Friday.

Based on its closing price on Monday, the offer represents 761 pence for each Rightmove share to give an overall valuation of 6 million pounds.

REA has a large presence in its home market of Australia and has expanded into India and the U.S. while also having a foothold in Malaysia, Singapore, Thailand and Vietnam. A deal with Rightmove would see it enter the U.K. market and combine two of the English-speaking world's dominant real-estate listing websites, with REA saying Rightmove shareholders would receive a significant premium with immediate value in cash as well as an opportunity to benefit from its core digital property.

"We live in a world of intensifying competition and this proposed transaction would bring together two highly complementary digital property businesses for investment and growth," REA said Monday.

U.K. rival OnTheMarket was acquired by U.S. real-estate company CoStar late last year and investors were concerned that the deal and subsequent marketing investment would see Rightmove's margin decline or its growth slow, according to analysts at Panmure Liberum.

However, the analysts believe these concerns are probably overdone and they expect Rightmove earnings growth to accelerate and the stock to re-rate.

"This is the investment thesis which shareholders should require compensation to forego--and at a 15% premium to our spot valuation, we do not believe this [third] offer does that," the analysts say.

Australia-listed REA previously tabled proposals worth 749 pence and 705 pence a share, and said Monday that it was genuinely disappointed at the lack of engagement by Rightmove's board, which analysts at Jefferies said could hint at REA preparing to launch a hostile bid if the latest offer is rejected.

Rightmove said the board would respond to the latest proposal in due course and advised shareholders not to take any action. Its Chairman Andrew Fisher said the board was confident in the company's prospects and its continued shareholder value creation.

Rightmove shares were up 1.7% at 685.80 pence in afternoon trading, having risen 19% so far this year.

REA had until Sept. 30 to either make a formal offer for Rightmove or walk away under U.K. Takeover Panel rules.

News Corp also owns Dow Jones & Co., the publisher of Dow Jones Newswires and The Wall Street Journal.

Anthony O. Goriainoff contributed to this article.

Write to Mike Cherney at mike.cherney@wsj.com and Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 23, 2024 07:43 ET (11:43 GMT)

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