Rightmove Rejects Third Bid From REA Group Valued at $8.1 Billion — Update

By Dominic Chopping

Rightmove rejected a third bid from News Corp.-controlled REA Group valued at $8.1 billion, saying the latest offer still materially undervalues the company and its future prospects.

Australian real-estate advertiser REA launched its latest bid earlier this week as it perseveres in its attempt to combine two of the English-speaking world's dominant real-estate listing websites.

The latest bid of 6 billion pounds ($8.05 billion) comprised 341 pence in cash and 0.0422 new REA shares for each Rightmove share which, based on REA's closing share price on Monday had valued each Rightmove share at 761 pence.

That followed previous proposals worth 749 pence and 705 pence a share earlier this month.

Rightmove shares closed Tuesday at 683 pence and fell 0.4% in early trade Wednesday to 680.40 pence.

In its rejection Wednesday, Rightmove noted a drop in REA's share price had reduced the value of the offer. Since Aug. 30--the last day before news of REA's interest in the company was announced--Rightmove said REA's share price has fallen by around 12%.

The rejection should come as no surprise to REA as the latest bid only values Rightmove in line with its closest peers and ignores the potential growth prospects and expected re-rating of shares, while the structure of the offer is overly complicated, Sean Kealy at Panmure Liberum said in a note to clients.

"As a result, we continue to see a low likelihood that a successful deal can be closed, in the absence of some creativity on REA's part to increase its bid."

REA said it was disappointed with the rejection and frustrated that it hasn't been able to have substantive talks with Rightmove. Analysts have previously suggested that REA's apparent frustration at a lack of engagement in talks by Rightmove's board could hint that the Australian company is preparing to scrap a recommended takeover and instead launch a hostile bid.

"REA continues to firmly believe that the further improved proposal represents a highly compelling proposition for Rightmove's shareholders at a significant premium," it said.

The Australian company said Wednesday it remains committed to its capital allocation framework and a disciplined approach to dealmaking as it urged Rightmove shareholders to encourage the board to begin talks and work toward a recommended transaction ahead of a Sept. 30 deadline.

REA Group is controlled by News Corp, which owns Dow Jones & Co., the publisher of Dow Jones Newswires and The Wall Street Journal.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 25, 2024 03:56 ET (07:56 GMT)

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