Rightmove has rejected a £5.6bn takeover offer from rival Australian REA Group, adding that the bid “fundamentally undervalued” the UK’s biggest property portal.
REA, owned by media tycoon Rupert Murdoch, offered 305p in cash and 0.0381 new REA shares for each Rightmove ordinary share, implying a total offer of 698p per share.
This is a premium of 26% to the undisturbed closing share price of Rightmove as of 30 August, the last business day prior to REA confirming that it was considering a bid for the business.
However, the Rightmove board said the offer was “wholly opportunistic and fundamentally undervalued Rightmove and its future prospects,” adding that its shareholders should “take no action in respect of the proposal”.
But REA says the move is “a highly compelling proposition,” which would create “a global and diversified digital property company, with strong margins and significant cash generation, underpinned by number one positions in Australia and the UK”.
REA, which employs almost 3,000, staff, trades across Australia, Asia and the US under a series of brands, including PropTrack, realator.com and PropTiger.com.
AJ Bell investment director Russ Mould says: “A 27% bid premium was never going to be taken seriously by the company or its shareholders. REA would have to stump up a lot more to get the deal over the line.
“Now comes the interesting part where we see if REA is serious in its pursuit for Rightmove, or whether it was simply trying its luck at a bargain price.
Mould adds: “Rightmove has two key characteristics which theoretically deserve an above-average bid premium.
“First, it is the UK market leader in its field and second, it is a unique asset on the London Stock Exchange. Shareholders know it holds these qualities and they aren’t going to let it go without proper compensation.”
Rightmove shares edged 0.5% higher to 674p in morning trading.
