Rightmove shuns ‘unattractive’ £6.1bn offer from REA
Rightmove has rebuffed Australian property group REA’s £6.1bn takeover bid, saying it still undervalues the company.
On Monday, Rupert Murdoch-owned REA sweetened its offer for the British property portal, just days after it had raised it for the second time to £5.9bn.
Rightmove said today its board unanimously rejected the bid on Tuesday. It considered the improved offer and concluded that it “continues to be unattractive and materially undervalues the company and its future prospects”.
It also pointed out that, since 30 August 2024, the last business day before the offer period, to 24 September 2024, REA’s share price has fallen by around 12 per cent.
REA’s offer of 341p in cash plus 0.0422 new REA shares introduces an element of risk because, if the offer is accepted, the value of the shares could decline further, potentially lowering the total worth of the bid after it’s finalised.
Earlier this month, Rightmove snubbed an initial £5.6bn offer from Rupert Murdoch-owned REA, describing it as “wholly opportunistic”.
In response, REA has said it is “disappointed by the latest rejection from the Board of Directors of Rightmove and is frustrated that, save for the rejection of REA’s three previously disclosed proposals, REA has still had no substantive engagement with Rightmove.”
Owen Wilson, REA chief executive has previously said the company believes a combination of its own technology with the Rightmove business will “create an enhanced experience for agents, buyers and sellers of property.”
He also slammed an alleged “lack of engagement” by Rightmove’s Board.
But analysts have pointed out that REA may need to bid much higher if it wants to bag London’s most profitable company.
Shareholder row breaks out
Shareholders appear to be torn over the potential deal, with some frustrated at Rightmove’s alleged lack of engagement.
Sydney-headquartered GCQ Funds Management, a large Rightmove shareholder, has written to Rightmove’s board to urge it to engage with REA.
“I commend the Rightmove board for rejecting the initial lowball offers,” Doug Tynan, chief investment officer of GCQ told the Australian Financial Review. “However, the revised £7.70 proposal demonstrates the seriousness of REA’s intent and as a consequence, we are at the point where it is in shareholders’ interests for the board to engage with REA,” he added.
Similarly, Phil King, the chief investment officer of Regal Partners, which holds stakes in both Rightmove and REA, said: “In our view [Rightmove] don’t appreciate the upside to the REA share price if the deal is successful and the downside to the Rightmove share price if the offer is withdrawn.”
But Baillie Gifford fund manager Iain McCombie has said shareholders will not let Rightmove be taken over cheaply.
“People worried about CoStar buying OnTheMarket, but it hasn’t done well,’ McCombie recently told an audience of private investors in London. “Rightmove is the cheapest property portal in the world by a margin. REA Group noticed that and made a bid.
“We’re not going to sell that cheaply because it is a unique business and has a dominance there in this market.”
The deadline for REA to put up or shut up is Monday. It may seek an extension to the deadline or pursue a more aggressive hostile takeover.