Rightmove bosses said the deal ‘continues to be unattractive’ and ‘undervalues the company’ – as earlier efforts by Murdoch to acquire the UK’s leading property portal also failed
Rightmove has rejected a £6.1 billion takeover deal from an Australian company owned by Rupert Murdoch – saying the offer “continues to be unattractive” and massively undervalues the company.
It is the third attempt by the Murdoch-owned firm to be rejected in recent weeks. REA Group, which is majority-owned by the Aussie tycoon’s News Corp group, made its latest offer to take over the the UK’s largest online real estate property portal on Monday. The deal put forward a 770p-a-share proposal after its previous move, which valued the company at roughly £5.6 billion was rejected earlier this month. On Wednesday, September 25, Rightmove bosses unanimously rejected the latest offer.
The firm candidly told investors: “The board considered the increased proposal, together with its financial advisers, and concluded that the increased proposal continues to be unattractive and materially undervalues the company and its future prospects.” The UK firm also highlighted a dip in the value of REA’s own shares in recent weeks as it rebuffed the proposal. Rightmove said that “shareholders should take no action in respect of the increased proposal”.
REA has a deadline of September 30 to submit a formal offer to buy Rightmove or walk away from a deal, in line with UK takeover rules. The Australian company said it was “disappointed” by the latest rejection. It added that it “is frustrated that, save for the rejection of REA’s three previously disclosed proposals, REA has still had no substantive engagement with Rightmove”.
News Corp, which is still majority-owned by Murdoch, runs UK newspapers The Sun and The Times and also owns a number of businesses and publications overseas, including The Wall Street Journal, New York Post, and Aussie publishers Harper Collins. Along with the REA Group, News Corp owns Realtor.com, a real estate website for buying and renting homes. A Rightmove deal would result in News Corp achieving its goal of having property operations in its three core markets.
The latest deal said Rightmove shareholders would have continued to own 20% of the company. On the news of the latest bid, Rightmove’s share price had another boost and was up 2.7%. It previously said the latest deal was an “unsolicited, non-binding and highly conditional proposal”, adding it will “carefully consider” the bid with its financial advisers. In response, REA argued the estate agent’s share price “lacked any sustained upward momentum for two years”.
The group said the takeover would strategically make sense, with increased investment. Owen Wilson, CEO of REA said: “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. We are genuinely disappointed by the lack of engagement by Rightmove’s board and we strongly encourage the Rightmove board to engage.”
Following Wednesday’s rejection, REA stressed that it still believes the proposal “represents a highly compelling proposition for Rightmove’s shareholders at a significant premium to relevant trading metrics, providing a combination of immediate value certainty in cash and at the same time giving Rightmove shareholders the opportunity to benefit from the future value creation of the combined business”.
The London Stock Exchange-listed Rightmove is the UK’s largest online real estate portal, while REA is Australia’s largest property website. REA was founded in a garage in Melbourne in 1995, and has expanded its operations throughout the country, with businesses in India and south-east Asia. It is valued at about 27 billion Australia dollars (£13.9 billion) on Australia’s stock market and employs around 3,400 staff.
