Rupert Murdoch set to sweeten his bid for Rightmove

An Australian property giant controlled by Rupert Murdoch is considering a higher bid for Rightmove, The Mail on Sunday can reveal.

Top brass at Rea, where the media tycoon owns a majority stake, are understood to be considering another offer after the property listings platform rejected a £5.6billion approach last week.

Rightmove said Rea’s offer was ‘opportunistic’ and ‘undervalued’ the company.

Another bid could come as early as this week, sources close to the situation added, with Rea’s bankers at Deutsche Bank keen to find a way of getting a deal over the line.

Analysts believe a bid of nearer £6billion is needed to win over Rightmove, which controls more than 80 per cent of the UK listings market.

Taking liberties: Rightmove said Rea’s offer was ‘opportunistic’ and ‘undervalued’ the company

Murdoch’s eldest son Lachlan orchestrated an investment in Melbourne-based Rea in 2001 when its shares crashed after the dotcom bubble burst.

Lachlan’s move was astute as Rea is now one of the biggest companies on the Australian Stock Exchange with a valuation of more than £13billion.

The Rea investment is viewed as one of his most crucial contributions to the family’s sprawling empire, which includes the Sun and Times newspapers.

Buying Rightmove would cement Lachlan’s position as the media baron’s favoured son.

It would also add a cash cow to support the family’s struggling newspaper division in the UK. The company has made similar moves in Australia and the US. 

The Rightmove offer comes amid a succession battle at Murdoch’s News Corp, with the 93-year-old media baron plotting to hand control to his eldest son, who has emerged as the likely successor ahead of his siblings James, Elisabeth and Prudence.

But last week, a plot twist emerged after hedge fund Starboard Value pushed for the end of Murdoch’s voting control at News Corp. 

The move takes aim at the family’s outsized voting weight at the media group.

The Murdochs’ ownership has come under renewed scrutiny in recent months, with Rupert reportedly moving to change the family’s trust. 

Rightmove is a prime target for Rea as the firm’s shares have tumbled after the UK property market was hit by higher mortgage rates.

The proposal rejected by Rightmove last week valued its shares at £7.05 each – below their 2021 peak of £7.95.

Rightmove’s shares closed at £6.70 on Friday, below the offer price, suggesting a higher bid may not materialise.

Analysts at broker Jefferies said: ‘Clearly, there is no certainty of the outcome yet.’

A source close to the company noted there were private equity companies circling in the background. The source said: ‘Private equity will come in, make cuts and sell it. Rea is offering to invest – that’s the difference.’

Rightmove’s profits and shares are expected to rally as the housing market makes a comeback. Interest rates have been cut from a 16-year high of 5.25 per cent, with further reductions expected this year. House prices hit a two-year high last month as falling mortgage rates improved buyer confidence, according to data from Halifax Bank.

Rea has until September 30 to announce a firm intention to make a bid or walk away.

The addition of Rightmove would create a financial cushion for the UK papers, but Lachlan’s ultimate loyalty to legacy media has always been in doubt. In recent years, Rupert Murdoch has been forced to reshape his empire in the face of global competitive pressure.

In 2017, Disney acquired his 21st Century Fox entertainment business for $71billion (£55billion), while a year later, Murdoch was forced to relinquish control of Sky after being outbid by Comcast’s £30billion offer. 

In the mid-1990s, the ever-astute Rupert was quick to realise the devastating impact the internet would ultimately have on the immense newspaper classified advertising industry. Online property is a natural fit for a newspaper business to strategically understand, albeit with limited operational synergies.

Douglas McCabe at Enders Analysis points to the success enjoyed by the owner of the Daily Mail’s investment in Zoopla, and the Guardian’s former ownership of AutoTrader.