Rightmove has declined a £5.6 billion takeover proposal from Rupert Murdoch’s REA Group, describing the offer as ‘opportunistic’ and asserting it undervalues the UK’s leading online estate agent.
The Australian real estate conglomerate, controlled by Murdoch’s News Corp, proposed a cash and share offer valuing Rightmove at 705p per share, which represents a 27% premium over the company’s current market valuation. Nevertheless, Rightmove’s board unanimously dismissed the offer. In their communication to investors, they stated: ‘The board carefully considered the proposal, together with its financial advisers, and concluded that it was wholly opportunistic and fundamentally undervalued Rightmove and its future prospects.’
According to City takeover regulations, REA Group has a deadline of 5pm on 30 September to either formalise its offer or withdraw. The offer from REA Group, which has a market value of A$26 billion (£13 billion) and holds various property brands, catalysed a 25% increase in Rightmove’s share price, elevating its market value to £5.3 billion by the close of trading on Tuesday.
The proposed deal suggested that Rightmove shareholders would own approximately 18.6% of the combined entity’s share capital and retain rights to an interim dividend of 3.7p per share. REA Group posited that the proposal offered ‘certainty of value’ through a cash component and substantial premium, along with potential growth benefits from the merged business. The financing for the cash part of the deal would be sourced from a combination of third-party debt and existing funds, while REA also aimed to secure a secondary listing on the London Stock Exchange to attract a broader investor base.
This rejection occurs at a challenging time for the UK property market, where high mortgage rates are reducing buyer interest. However, it is anticipated that market activity will improve as interest rates decline. This move aligns with a broader strategic shift by the Murdoch family to diversify beyond traditional media enterprises as Rupert Murdoch transitions leadership to his eldest son, Lachlan. At 93, Rupert Murdoch is reportedly seeking to amend the family trust to provide Lachlan with sole control, a decision that has stirred dissent among his other children and set the stage for potential legal disputes in Nevada.
Rightmove’s rejection of the REA Group’s substantial offer underscores their confidence in the intrinsic value and growth prospects of the company, despite the current challenges in the UK property market.