Billionaire Rupert Murdoch’s REA Group has added another £200m to a sweetened offer for Rightmove, valuing the UK’s biggest online property portal at more than £6bn.
The Australian group said it had made a third offer for the company, worth £6.1bn, in a statement to stock exchanges in Sydney and London.
It emerged last week that REA had improved its initial offer by about £300m to make a second approach, worth £5.9bn, but the company said on Monday that Rightmove had rebuffed that bid and it had made a “further improved proposal”.
Rightmove dominates the process of buying and selling homes in the UK. Estate agents list properties on the portal to gain access to buyers, giving away a slice of their revenues.
Some of the largest estate agents tried to strike back with their own portal, OnTheMarket. That portal is expected to have more firepower to win back control of the market from Rightmove and the second biggest portal, Zoopla, after the US property company CoStar bought it.
Murdoch’s company announced its first £5.6bn approach on 5 September. However, Rightmove has not expressed interest in a takeover, which would make it the latest of London’s blue-chip companies disappear from the FTSE 100 index.
Owen Wilson, the REA chief executive, said “We are genuinely disappointed at the lack of engagement by Rightmove’s board.”
“We live in a world of intensifying competition and this proposed transaction would bring together two highly complementary digital property businesses for investment and growth,” he added.
He said the sweetened offer gave “a combination of immediate value certainty in cash” plus a chance to partake in REA’s growth.
REA’s controlling shareholder is News Corp, the media empire of the Australia-born billionaire Rupert Murdoch. Since Murdoch and his family sold some of their media crown jewels and the patriarch retired from leadership of the rest, the property company has taken on increasing importance in News Corp’s portfolio.
REA is valued at A$25bn (£12.8bn), more than News Corp. That prompted the activist investor Starboard Value to put pressure on News Corp last year to sell REA to realise its value.
On Monday, REA touted the rapid appreciation of its share price, which has gained 75% over the past two years, compared with the 18% increase in Rightmove’s stock.
REA owns a number of property websites in Australia, including realestate.com.au, property.com.au and the data company Proptrack. It also has several brands in India, and realtor.com in the US. The company has previously tried to expand into the UK, but it sold that operation to Zoopla in 2009.
The Murdochs first bought a stake in REA in 2001. Their company, News Corp, owns 61% of REA’s shares, with no other shareholder owning more than 2%, according to S&P Global Market Intelligence.
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said: “Rightmove shares had been affected by the property market downturn amid a ratcheting up in interest rates. But now, with more cuts eyed on the horizon and a recovery in prices under way, there are now many more eyes on screen.
“REA Group is clearly highly tempted by the sturdy fundamentals of the model, which offers an envious operating margin position of around 70%. DIY alternatives may be growing, but they are only a small slice of the market, and many estate agents can’t afford not to advertise on Rightmove.”
REA’s offer is worth 770p for each Rightmove share – structured as 341p in cash and 0.0422 new REA shares. Rightmove shareholders would end up with about a fifth of the combined company’s shares, REA said.
In response to REA’s latest offer, Andrew Fisher, the chair of Rightmove, said: “Based on the implied value and structure of REA’s first and second indicative non-binding proposals, we considered these proposals to be uncertain, highly opportunistic and unattractive. Accordingly, the board unanimously rejected them.
“The board will continue to act on behalf of our shareholders and respond to the most recent proposal in due course.”
Shares in Rightmove closed at 555.6p on 30 August, the last trading day before REA’s initial interest emerged. The stock rose nearly 2% to 687p in early trading on Monday morning.
