REA Group raises Rightmove takeover supply to £6.1bn

REA Group has increased its takeover bid for Rightmove to £6.1billion, £500million higher than its initial proposal.

The Australian property listings website, whose majority owner is Rupert Murdoch’s News Corporation, has brought forward a new offer valuing Rightmove’s shares at 770p each.

It represents a 9.2 per cent increase on its original £5.6billion bid, which Rightmove turned down because it was too low and ‘wholly opportunistic.’

Too low: Rightmove said REA’s original offer was ‘opportunistic’ and ‘undervalued’ the firm

Having also had a £5.9billion proposal rejected, REA said its latest offer ‘represents a highly compelling proposition’ for Rightmove’s investors, who would own 20 per cent of the enlarged firm should the takeover go ahead.

Under the deal, Rightmove’s investors would receive 341p in cash for each share they hold, along with just over 0.04 new REA shares.

Melbourne-based REA has also said the transaction would ‘enhance the UK property experience for buyers, sellers, and renters, positively contributing to the property market ecosystem’.

Owen Wilson, chief executive of REA, said: ‘We believe that the combination of our world-leading expertise and technology with the attractive Rightmove business will create an enhanced experience for agents, buyers and sellers of property.

‘We live in a world of intensifying competition, and this proposed transaction would bring together two highly complementary digital property businesses for investment and growth.’

REA urged Rightmove bosses to begin discussions, saying it ‘has had no substantive engagement’ with the company since the offer period began.

Rightmove told shareholders it would ‘carefully consider’ REA’s new offer with its financial advisers.

Over the past two years, the London-based group has enjoyed strong results despite higher interest rates and cost-of-living pressures dampening the housing market.

In the first half of 2024, its turnover increased by 7 per cent to £192.1million thanks to contract renewals by estate agents and housing developers, while operating profits tipped up by 2 per cent to £131.6million.

Rightmove upheld its annual guidance following the performance, with revenue expected to grow by 7 to 9 per cent.

Andrew Fisher, chairman of Rightmove, said: ‘Rightmove is an exceptional company with a very clear strategy, a consistent track record of delivery and a strong management team.

‘The board is confident in the company’s short and long-term prospects and sees a long runway for continued shareholder value creation.’

If REA acquires Rightmove, it would represent another massive blow for the London markets, which have lost multiple prominent firms in recent years to foreign buyers.

UK-listed businesses are often considered easy targets for acquisition due to the pound’s devaluation since the Brexit vote and a perceived undervaluation relative to global peers.

Among the firms to have agreed takeover deals in the past few months include Britvic, Hargreaves Lansdown, Keywords Studios, and cybersecurity giant Darktrace.

Rightmove shares were 2.6 per cent higher at 691.8p on Monday morning.