(Bloomberg) -- REA Group Ltd. has made a fourth takeover proposal in less than a month for Rightmove Plc, valuing the UK property portal at about £6.2 billion ($8.7 billion).
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Rightmove said it would consider the cash-and-stock package — a step it’s taken with past REA proposals before rejecting them. The firm’s London-listed shares are far below the indicated offer value, in a sign traders aren’t banking 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 firm’s share price on Friday, the total offer values Rightmove at about £6.2 billion, or 11% higher than REA’s initial bid and 41% above the company’s market price before the takeover interest emerged.
REA, which is part of media mogul Rupert Murdoch’s empire, reiterated its “disappointment and surprise” at Rightmove’s repeated rejections of its prior proposals. It requested an extension to the Sept. 30 regulatory deadline to make a formal offer.
In response, Rightmove said on Friday its board “will consider the latest proposal together with its financial advisers and, in the meantime, shareholders are urged to take no action.”
The UK’s go-to website for property listings has grown steadily in recent years and it’s poised to benefit as declining interest rates and the Labour government’s planning reforms look set to boost the housing market. Sales are expected to rise by a further high-single-digit percentage in 2024-25, according to a Bloomberg Intelligence report.
Shares in Rightmove rose 1.3% to 673.8 pence by 4:10 p.m.
“Rightmove’s share price continues to suggest the market does not expect this deal to go through, and we are of a similar view,” Citigroup Inc. analyst Doyinsola Sanyaolu said in a note to clients.
REA said it had “repeatedly requested” meetings with Rightmove, but that none had taken place. The Australian firm said that it had been in contact with Rightmove’s shareholders, who would hold about 20% of the combined group’s shares based on the latest offer.
Iain McCombie at fund manager Baillie Gifford — Rightmove’s fifth-largest shareholder — told investors at a conference earlier this month that the fund won’t sell its shares “cheaply.” A Baillie Gifford spokesperson said on Friday that McCombie has nothing to add to these comments.
An offer price of less than 800 pence is unlikely to be accepted, and REA may need to improve it even if it turns hostile by appealing directly to Rightmove shareholders, according to a BI report this week.
REA is among a small number of companies suited to buying Rightmove. US real estate firm CoStar Group Inc. purchased rival property portal OnTheMarket Plc for about £100 million last year, while private equity investor Silver Lake Management already owns Zoopla Ltd., effectively ruling them both out of a deal.
By keeping its doors closed to REA, Rightmove has already managed to extract a quick succession of sweeteners from its suitor. The risk for Rightmove’s shareholders is that REA walks away and shares in the UK company slump.
What Bloomberg Intelligence Says:
Rightmove’s receipt of REA’s fourth takeover proposal — worth 775p a share (based on REA’s closing price on Sept. 27) plus an additional special dividend of 6p a share — is still likely to be rejected by the former’s board and shareholders.
We maintain the view that only an offer above 800 pence is likely to sway acceptance.
— Tom Ward, BI analyst
--With assistance from Joe Easton.
(Adds market context from second paragraph.)
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