Rightmove has dismissed a £5.6 billion bid from Rupert Murdoch’s REA Group, calling it opportunistic. This move underscores Rightmove’s confidence in its current valuation and future growth prospects despite market challenges.
- The proposal offered a 27% premium on Rightmove’s market valuation, yet the board found it insufficient.
- REA’s bid followed a surge in Rightmove’s share price, highlighting market volatility.
- Rightmove’s decision reflects strategic confidence amid a fluctuating UK property market.
- The takeover bid ties to broader Murdoch family strategic shifts and leadership transitions.
REA Group, backed by Murdoch’s News Corp, presented a takeover bid for Rightmove valued at 705p per share. Despite the proposal offering a 27% premium over Rightmove’s existing market valuation, the board of Rightmove unanimously rejected it. The board characterized the bid as “opportunistic” and fundamentally undervaluing the company and its future potential. This decision highlights Rightmove’s confidence in its strategic path and growth outlook, regardless of the current property market challenges.
The initial interest from REA Group resulted in a 25% increase in Rightmove’s share price, raising its market capitalization to £5.3 billion. The bid would have granted Rightmove shareholders about 18.6% of the combined company’s share capital, alongside an interim dividend of 3.7 pence per share. REA underscored the deal’s financial security, proposing it would be financed through a combination of debt and current funds. Despite these financial assurances, the strategic merits did not sway Rightmove’s board.
The UK property market is currently experiencing difficulties, influenced by high mortgage rates that dampen buyer interest. Despite these challenges, there are expectations for improved market activity as interest rates decrease. Rightmove’s rejection of the bid reflects a conviction in its ability to navigate these conditions independently, upholding its valuation.
Furthermore, the bid aligns with a broader strategic shift by the Murdoch family towards diversifying beyond traditional media interests. This includes Rupert Murdoch’s transition of leadership to his eldest son, Lachlan. The bid comes amidst reported attempts by Rupert Murdoch to alter family trust provisions to grant Lachlan sole control, a move that may lead to legal contention with other family members.
Rightmove’s rejection of the takeover bid asserts its strong valuation and strategic confidence amidst market and leadership transitions.
