REA Stock Rallies After Property Advertiser Withdraws Rightmove Proposal

By Stuart Condie

SYDNEY--REA Group shares rallied after the News Corp-controlled property advertiser abandoned its multi-billion dollar pursuit of U.K. counterpart Rightmove.

The Australia-listed stock was up by 5.1% at 211.19 Australian dollars, equivalent to US$146.00, about halfway through Tuesday's local session. The move continued a recovery that began amid a rise in global equities last week.

The stock had previously fallen 12% after REA declared its initial interest on Sept. 2, with analysts noting dwindling potential earnings accretion as Rightmove refused to engage with three successive proposals of increased value.

Analysts had also questioned the strategic rationale and pointed to limited potential synergies due to differences between the Australian and U.K. advertising markets. REA withdrew its fourth proposal late Monday after Rightmove said it materially undervalued the business and its prospects.

REA's confirmation that it doesn't intend to make an offer for Rightmove removes the recent overhang on the share price, Macquarie analysts said in a note to clients.

REA had A$204.3 million in cash and more than A$480 million in undrawn debt at the end of the fiscal year on June 30. With the Rightmove saga apparently over, it could divert some of its cash to shareholders via a special dividend, Citi analyst Siraj Ahmed said.

REA is 61% owned by News Corp, which owns Dow Jones & Co., the publisher of Dow Jones Newswires and The Wall Street Journal.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

September 30, 2024 23:41 ET (03:41 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.