Murdoch’s REA Group ends takeover interest in Rightmove
The Australian property firm has given up its pursuit of Rightmove after having a fourth bid rejected
REA Group, which is majority-owned by Rupert Murdoch's News Corp, has withdrawn its interest in buying UK property website Rightmove.
The move comes after Rightmove rejected a fourth takeover bid from REA earlier on Monday (30 September), which valued the UK online property firm at £6.2 billion.
REA tabled its final offer on Friday, putting forward a cash-and-shares deal worth 775p a share based on the close of trading at the end of last week.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The latest rejection came after Rightmove turned down a £6.1 billion bid from REA last Wednesday, which Rightmove said "fundamentally undervalued" the company.
REA had until 5pm today to make a firm offer or walk away under City Takeover Panel rules. REA on Friday asked Rightmove’s board to permit an extension of the deadline and engage in talks with REA. But the Rightmove board also rejected this request.
REA said: “REA confirms that it does not intend to make an offer for Rightmove. REA believes the proposed combination would have provided Rightmove shareholders the opportunity to meaningfully participate in a fast growing, diversified, global leader whilst receiving value certainty in an operating environment challenged by increased market competition.”
It added that “Rightmove's share price has lacked any sustained upward momentum for two years despite being supported by its ongoing share buyback programme”.
Andrew Fisher, chairman of Rightmove, said earlier on Monday: "We respect REA and the success they have achieved in their domestic market.
"However, we remain confident in the standalone future of Rightmove. Rightmove has been the leading operator in the UK for over 20 years, and it has differentiated market presence, branding and technology, and very significant opportunities for future growth.
"The last few weeks have been very disruptive, as well as unsettling for our colleagues."
When news of a possible takeover attempt first broke on 2 September, it caused Rightmove’s shares to soar by more than 20% on the day.
At the time REA said it was “considering a possible cash and share offer” for the company because it believed there were “clear similarities between REA and Rightmove in terms of their leading market positions in the core residential business”.
Rightmove: what would a takeover mean for investors?
“REA moving on Rightmove amounts to a highly opportunistic bid,” says Russ Mould, investment director at AJ Bell.
“The target’s share price has been weighed down by investor worries about a lacklustre property market and a new competitive threat after US property giant CoStar struck a deal to expand into the UK,” he adds.
CoStar bought UK property website OnTheMarket last year, putting pressure on Rightmove as it seeks to retain its reputation as the number-one platform for people looking to buy, sell, or rent a house.
Rightmove’s share price has been broadly flat since the UK property market’s downturn at the end of 2022, meaning many investors will have lost out when the effects of inflation are taken into consideration.
What is more, the company has not benefited from the rally seen in the broader UK stock market so far this year. Before news of the possible takeover attempt broke on September 2, Rightmove's shares were down around 0.3% year-to-date. Meanwhile, the FTSE 100 was up more than 8% over the same period.
Despite this, shareholders are unlikely to accept a potential takeover attempt without a decent offer being made – particularly now that the outlook for the UK property market is improving.
Mortgage rates have been coming down for the past few months, and have fallen further since the Bank of England’s first interest rate cut on 1 August. While affordability challenges remain, the latest data suggests buyers are starting to return to the market.
An uptick in property market activity would spell good news for Rightmove, which makes money from estate agents advertising properties on its portal.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Chris is a freelance journalist, and was previously an editor and correspondent at the Financial Times as well as the business and money editor at The i Newspaper. He is also the author of the Virgin Money Maker, the personal finance guide published by Virgin Books, and has written for the BBC, The Wall Street Journal, The Independent, South China Morning Post, TimeOut, Barron's and The Guardian. He is a graduate in Economics.
-
8 of the best houses for sale with libraries
This week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
By Natasha Langan Published
-
Investors pull money from UK equities as government warns of “painful” Budget
The government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
By Katie Williams Published