Rightmove rejects ‘opportunistic’ £5.6bn takeover supply

Rightmove has turned down a £5.6billion takeover proposal from REA Group, calling dismissing the bid as too low and ‘wholly opportunistic.’

Britain’s biggest property listings website confirmed it received a cash-and-share offer that valued its shares at 705p each, a 27 per cent premium to their price on 30 August. 

But Rightmove said changes in REA’s share price meant the offer reflected a value of 698p per Rightmove share, or a premium of 26 per cent premium. 

REA is an online real estate advertising firm headquartered in Melbourne, Australia, whose largest shareholder is Rupert Murdoch’s News Corporation.

The company’s offer for Rightmove comprises 305p per share in cash, which will be partly financed through debt, and around 0.04 new REA shares for every ordinary Rightmove share.

It believes such an acquisition would benefit shareholders by creating a business ‘with strong margins and significant cash generation’ that is number one in both the UK and Australia.

REA also said it would ‘enhance the UK property experience for buyers, sellers, and renters, positively contributing to the property market ecosystem’.

If the proposal was successful, Rightmove investors would own about 18.6 per cent of the enlarged business.

But having assessed the deal, Rightmove’s board unanimously rejected it on Tuesday after determining that it was ‘wholly opportunistic and fundamentally undervalued Rightmove and its future prospects.’

The FTSE 100 group said its announcement today was made without REA’s approval or agreement, and there was ‘no certainty’ another bid will be made. 

Under City takeover rules, REA has until 5pm on 30 September to declare a firm intention to make another bid or walk away.

Rightmove has shown resilience over the past two years amid subdued housing market conditions caused by interest rate hikes and cost-of-living pressures.

Its turnover increased by 10 per cent to £364.3million last year on the back of price hikes and stronger demand for its packages and digital products, while operating profits rose by 7 per cent to £258million.

Revenues and profits continued to grow in the opening half of 2024, with the former expanding by 7 per cent to £192.1million.

However, Rightmove shares have tumbled since peaking at almost £8 in December 2021. They were 0.5 per cent up at 674.4p in early Wednesday trading.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said REA’s pursuit of Rightmove was likely partly motivated by its falling share price.

She added: ‘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.’