REA Group makes improved offer to buy U.K.'s Rightmove for $8.3 billion

By Louis Goss

News Corp's REA Group has submitted a fourth, improved offer to fully acquire its main British rival Rightmove for GBP6.2 billion ($8.3 billion), just days after the U.K.'s top online real estate agent rejected a third offer from the Australian firm that valued its business at GBP6.1 billion.

REA Group's newest cash and shares offer would see the Melbourne conglomerate buy Rightmove for 781 pence per share, in what marks an 11% premium on the initial 705 pence per share offer it made on Sept. 5.

The acquisition would give Rightmove's shareholders a 20% stake in the newly expanded REA Group alongside a special 6 pence per share dividend, via a deal that would give the U.K. firm's shareholders a "mix and match" facility, to let them pick a more cash-heavy deal.

The Australian firm said its new bid would see it pay 15% more in cash, following concerns from Rightmove's board that the slip in REA Group's share price since it submitted its first bid on Sept. 5 had undermined the value of the deal.

Panmure Liberum analysts noted high demand for cash payments from Rightmove's shareholders via the "mix and match" facility could, in reality, mean shareholders in the U.K. firm receive little more cash than they would have otherwise.

REA Group, in turn, called on Rightmove's shareholders to pressure the U.K. firm's board to engage in negotiations. The Melbourne real estate agent said it has had "no substantive engagement beyond cursory procedural telephone calls with the Rightmove Chairman."

""While the Rightmove Board has refused to meet with us, we have enjoyed the opportunity to connect with Rightmove shareholders and to share our vision for the combination of the no. 1 digital property businesses in the UK and Australia," REA Group CEO Owen Wilson said.

Rightmove (UK:RMV) shares, listed on the London Stock Exchange, fell 1% on Friday having increased by 18% in the year to date. REA Group (AU:REA) shares, listed in Sydney, were up 1% on Friday having increased 9% in 2024 so far.

Rightmove has previously rejected all three offers put forward by REA Group over claims the bids have undervalued its business and future prospects, while describing the Melbourne firm's bids as "unsolicited."

Analysts at Peel Hunt currently expect Rightmove's valuation could be boosted by a revival of the U.K.'s housing market, driven by cuts to the Bank of England's interest rates and the new Labour government's housing policies.

MarketWatch is owned by Dow Jones, a subsidiary of News Corp (NWSA) (UK:0K7U).

-Louis Goss

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-27-24 0642ET

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