Australian suitor sweetens offer for Rightmove

The Australian group pursuing Rightmove has sweetened its takeover offer after three bids were rejected and has urged shareholders to press the British property website to enter talks.
The new proposal by REA Group is made up of a cash-and-shares package of 775p a share, a 17 per cent premium to Rightmove’s closing price on Thursday, and a 6p special dividend, valuing its target at £6.2 billion. It has increased the cash part of the bid to 346p per share and reduced the stock element to 0.0417 new REA shares.
Rightmove’s suitor also wants to extend Monday’s deadline for it to make a firm offer or walk away.
REA, which is 61 per cent-owned by News Corp, the publisher of The Times, said it believed that it was in shareholders’ interests for the Rightmove board “to engage in constructive discussions with REA to work towards a recommended transaction”.
Rightmove has rejected three indicative offers as opportunistic, unattractive and undervaluing the company’s prospects. It has yet to respond to the latest proposals.
Several Rightmove shareholders have said that the property website should start talks with its Australian rival.
Jamie Forbes-Wilson, a fund manager at Axa Investment Managers, which holds about 1 per cent of Rightmove, said after the third indicative offer: “We would agree that it feels a little opportunistic for REA to be coming along at this time, but it is also recognition that REA sees Rightmove as the high-quality business that we, as long-term holders of the share, think that it is.”
He said the third offer, which valued Rightmove at about £6 billion, or 771p a share, had been at a level at which the board should begin to “engage”, a view shared by GCQ Funds Management, an Australian fund manager with shares in Rightmove.
Rightmove’s shares have been under pressure in recent years amid concerns about increased competition in the domestic market from CoStar, the American property market powerhouse that has bought OnTheMarket, a rival property platform. The shares, which stood at about 550p at the end of August before REA’s interest was revealed, were down by 8½p, or 1.3 per cent, at 656½p in lunchtime trading.
Rightmove has an 86 per cent share of the house search market in Britain and enjoys high profit margins. For every £1 spent by estate agents and developers with Rightmove, it made 69p of profit in the first half. About 19,000 estate agents and developers advertise on the portal.
It is unclear how some of Rightmove’s biggest shareholders, such as Lindsell Train, with 7 per cent, and Baillie Gifford, with 4 per cent, view the deal.
Owen Wilson, REA Group’s chief executive, said: “While the Rightmove board has refused to meet with us, we have enjoyed the opportunity to connect with Rightmove shareholders and to share our vision for the combination of the No 1 digital property businesses in the UK and Australia. We continue to see the potential for us to strengthen Rightmove and accelerate its growth. We believe it is in the interests of Rightmove shareholders for the Rightmove board to engage with us and to extend the September 30, 2024, deadline.”