UK online property website Rightmove said Wednesday it had rejected a multi-billion-pound takeover proposal from Australian peer REA Group, majority owned by Rupert Murdoch’s News Corp empire.
Rightmove said in a statement that the cash and shares bid, worth £5.6 billion (US$7.3 billion), “was wholly opportunistic and fundamentally undervalued” the company.
REA made public its interest in Rightmove on September 2, noting “clear similarities” between the pair “in terms of their leading market positions in the core residential business”.
Sector-watchers said REA could be attracted by the prospect of more interest-rate cuts in Britain which would lower mortgage costs for buyers, as well as by the new government’s plans for mass housebuilding.
“REA Group’s bid for Rightmove was highly opportunistic and so it’s little surprise that it’s been rejected for fundamentally undervaluing the company and its future prospects,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“REA Group runs property websites and indices across Australia, Asia and North America, so getting a dominant foothold in the UK would be very attractive,” she added.
In a separate statement Wednesday, REA said its offer was worth 705 pence per Rightmove share.
The British group traded up 0.5 percent at 674 pence in reaction to the latest updates, giving it a market value of about £5.3 billion.
– New bid? –
Analysts said it remained to be seen whether REA returns with a higher bid by September 30, when it must table a firm offer or walk away under British takeover rules.
“Now comes the interesting part where we see if REA is serious in its pursuit for Rightmove, or whether it was simply trying its luck at a bargain price,” said Russ Mould, investment director at AJ Bell.
He said Rightmove held key characteristics which could keep REA in the running.
“First, it is the UK market leader in its field and second, it is a unique asset on the London Stock Exchange.
“Shareholders know it holds these qualities and they aren’t going to let it go without proper compensation.”
Streeter added that “another higher offer from REA Group can’t be ruled out, and this may already have opened a stream of other interest, with private equity firms potentially first in the queue”.
REA added Wednesday that should it succeed in buying Rightmove, it would apply for a secondary stock market listing in London, in addition to its current trading on the Australian Securities Exchange.
“This would provide the opportunity for a wider pool of investors to gain exposure to a global and diversified digital property company on the London Stock Exchange,” it said.
