Rightmove has firmly rejected a £5.6 billion takeover bid from Rupert Murdoch’s REA Group, branding it as ‘opportunistic.’
- The offer, valuing Rightmove shares at a 27% premium, was unanimously turned down by Rightmove’s board for undervaluing future prospects.
- REA Group, a major Australian real estate firm, must decide by September 30 on formalizing or withdrawing the offer.
- Rightmove’s share price surged by 25% following the bid announcement, reaching a £5.3 billion market valuation.
- This move aligns with Murdoch’s strategic shift towards diversifying his business interests beyond traditional media.
Rightmove, the leading online estate agent in the UK, has categorically turned down a substantial £5.6 billion takeover offer from Rupert Murdoch’s REA Group. This proposal was labeled as ‘opportunistic’ by Rightmove’s board, which argued that it fundamentally undervalues the company and its promising prospects. REA’s proposal included a mix of cash and shares, offering 705p per share, marking a 27% premium on Rightmove’s current market value.
The indicative offer prompted Rightmove’s share price to ascend by 25%, elevating its market capitalization to £5.3 billion. Despite this financial boost, Rightmove remains steadfast in its decision, emphasizing a strategic focus on its future potential rather than immediate gains.
REA Group, with a market value of £13 billion, has a vested interest in expanding its footprint on a global scale. Through this deal, Rightmove’s shareholders would possess approximately 18.6% of the combined entity, while obtaining rights to an interim dividend of 3.7 pence per share. REA asserted the merger could provide ‘certainty of value’ and tapped into funds and debt to finance the transaction.
Under UK City takeover rules, REA has a deadline until 5 pm on September 30 to either finalize or retract their bid. If pursued, a secondary listing on the London Stock Exchange is envisaged to capture wider investor attention, spotlighting a varied digital property platform.
This merger proposal surfaces at a time when the UK property market confronts challenges due to elevated mortgage rates, potentially suppressing buyer interest. However, the anticipation of declining interest rates could revive market activity. The move also reflects a strategic pivot for the Murdoch family, as they aim to diversify holdings beyond conventional media as Rupert Murdoch, aged 93, orchestrates a transfer of leadership to his son, Lachlan. This shift has instigated internal family disputes, setting the stage for a legal contest in Nevada.
Rightmove’s resolute rejection of REA Group’s offer underscores its confidence in its long-term value and strategic direction.
