(Bloomberg) — REA Group Ltd. has made a fourth takeover proposal for Rightmove Plc in less than a month, valuing the British property portal at around £6.2 billion ($8.7 billion).
Most read from Bloomberg
Rightmove said it would consider the cash-and-stock package – a step it took with previous REA proposals before rejecting them. The company’s London-listed shares are well below the stated offer value, a sign that traders are not counting on REA to be successful before Monday’s deadline to make a firm takeover bid.
Friday’s proposal values Rightmove shares at 775 pence each, plus a special dividend of 6 pence per share, according to an REA statement. Based on the Australian company’s share price on Friday, the total offer values Rightmove at around £6.2 billion, or 11% higher than REA’s initial offer and 41% above the company’s market price before the takeover interest arose.
REA, which is part of media mogul Rupert Murdoch’s empire, reiterated its “disappointment and surprise” at Rightmove’s repeated rejection of previous proposals. It requested an extension of the September 30 legal deadline to make a formal offer.
In response, Rightmove said on Friday that the board “will consider the latest proposal with its financial advisers and in the meantime shareholders are urged not to take any action.”
The UK property listing website has grown steadily in recent years and is likely to benefit as falling interest rates and the Labor government’s planning reforms look to boost the housing market. According to a report from Bloomberg Intelligence, sales are expected to increase by another high single-digit percentage in 2024-2025.
Shares in Rightmove rose 1.3% to 673.8 pence at 4.10pm
“Rightmove’s share price continues to indicate that the market does not expect this deal to go through, and we share the same view,” Citigroup Inc. analyst Doyinsola Sanyaolu said. in a letter to customers.
REA said it had “repeatedly requested” meetings with Rightmove but none had taken place. The Australian company said it had been in contact with Rightmove shareholders, who would own around 20% of the combined group’s shares under the latest offer.
Iain McCombie of fund manager Baillie Gifford – Rightmove’s fifth-largest shareholder – told investors at a conference earlier this month that the fund would not sell its shares ‘cheap’. A spokesperson for Baillie Gifford said on Friday that McCombie had nothing to add to these comments.
An offer price of less than 800p is unlikely to be accepted and REA may have to improve this even if it turns hostile by appealing directly to Rightmove shareholders, a report from BI this week found.
REA is one of a small number of companies suitable for buying Rightmove. The American real estate company CoStar Group Inc. bought rival property portal OnTheMarket Plc last year for around £100 million, while private equity investor Silver Lake Management already owns Zoopla Ltd., effectively ruling them both out of a deal.
By keeping the doors closed to REA, Rightmove has already managed to extract a rapid succession of sweeteners from its suitor. The risk to Rightmove shareholders is that REA walks away and shares in the British company collapse.
What Bloomberg Intelligence says:
Rightmove’s receipt of REA’s fourth takeover proposal – worth 775p per share (based on REA’s closing price on September 27) plus an additional special dividend of 6p per share – is still likely to be rejected by the board and shareholders of the former.
We remain of the view that only an offer above 800p is likely to influence acceptance.
— Tom Ward, BI analyst
–With help from Joe Easton.
(Adds market context from second paragraph.)
Most read from Bloomberg Businessweek
©2024 BloombergLP
