The REA Group, owned by billionaire Rupert Murdoch, has added an additional £200m in a sweetened bid for Rightmove. This value the UK’s largest online property portal to more than £6bn. In a public statement sent to the stock exchanges of Sydney and London, the Australian group announced that it had made a $3.25bn third offer.
Last week, it was revealed that REA improved its initial offer by around £300m in order to make a second bid, worth £5.9bn. However, the company stated on Monday that Rightmove rebuffed this bid and that they had made a “further enhanced proposal”. Rightmove is the leading portal for buying and selling houses in the UK. Rightmove allows estate agents to list their properties to gain access buyers and give away a portion of their revenue.
OnTheMarket was created by some of the biggest estate agents to counter Rightmove and Zoopla. After the US property company CoStar purchased it, this portal should have the firepower needed to regain control of the market and to compete with Rightmove. Murdoch’s firm announced its first £5.6bn offer on 5 September. Rightmove, however, has not shown interest in a merger, making it the latest London blue-chip company to disappear from the FTSE 100.
Owen Wilson, REA’s chief executive, stated that “we are genuinely dismayed at the lack engagement of Rightmove’s board.” He added, “We live in an era of increasing competition. This proposed transaction will bring together two complementary digital property companies for investment and growth.”
He said that the sweetened deal gave “a combination immediate cash value and a chance to participate in REA’s growth”.
News Corp is the controlling shareholder of REA. It is the media empire owned by the australian billionaire Rupert Murdoch. Since Murdoch, his family and patriarch retired as leaders of the rest and sold some of their media crown-jewels, News Corp has given increasing importance to the property company.
REA’s value is A$25bn, or £12.8bn. This prompted activist investors Starboard Value last year to pressure News Corp to sell REA in order to realize its value.
On Monday, REA bragged about the rapid increase of its stock price. It has risen 75% in the last two years compared to the 18% rise in Rightmove.
REA is the owner of a number property websites in Australia including Realestate.com.au, Property.com.au, and Proptrack, a data company. The company also owns several brands in India and realtor.com, in the US. It has tried to expand to the UK before, but it sold this operation to Zoopla in 2009.
The Murdochs bought their first stake in REA back in 2001. According to S&P Global Market Intelligence, News Corp owns 61% of REA shares. No other shareholder has more than 2%.
Lachlan Murdoch was the one who spearheaded the investment. He is the eldest of Rupert’s sons and has been selected as the heir of his media empire. This includes the rightwing Fox News which played a major role in Donald Trump’s rise. Lachlan Murdoch’s investment is considered one of his most important contributions to the Murdoch’s family wealth.
Rupert has taken legal action in an attempt to transfer control of News Corp. to Lachlan who shares his political views.
Susannah Streeter is the head of money markets at Hargreaves Lansdown. She said that Rightmove shares were affected by the downturn in the property market, as well as the escalation in interest rates. Now, as more cuts are on the horizon, and prices are on the rise, more people will be watching.
“REA Group has clearly been tempted by the solid fundamentals of this model which provides an envious margin of 70%. “While DIY alternatives are growing, they still represent a very small portion of the market and many estate agencies can’t afford to not advertise on Rightmove.”
REA offers 770p per Rightmove share – 341p cash and 0.0422 REA shares. Rightmove’s shareholders will end up owning about a fifth the combined company shares, REA stated.
Andrew Fisher, chair of Rightmove in response to REA’s latest offer said: “Based on implied value and the structure of REA’s first and second non-binding indicative proposals, we found these proposals to unreliable, highly opportunistic, and unattractive. The board unanimously rejected the proposals.
The board will continue to act in the best interests of our shareholders, and respond to any recent proposals as soon as possible.
Rightmove shares closed at 555.6p in the 30th August, which was the last day of trading before REA’s initial interest appeared . In early Monday morning trading, the stock was up nearly 2% at 687p.
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