The Australian bidders targeting Rightmove were this weekend in tense talks with the company’s shareholders ahead of a key deadline tomorrow.
REA, the Australian homes website, a division of billionaire Rupert Murdoch’s media empire, must by 5pm tomorrow make a firm offer for the FTSE 100-listed property website or step away for six months – although an extension to the process may be requested.
REA bosses have flown to London to make their case for their cash-and-shares £6.2 billion offer, although the view is that they must pay £7 billion – all in cash.
Deadline: Rupert Murdoch’s REA has until 5pm tomorrow to make a firm offer for Rightmove or step away for six months
Whatever the outcome of the bid, REA’s ardent pursuit of Rightmove has exposed both companies to a brutal scrutiny of their strategies.
If REA triumphs, it is rumoured that it may try to radically alter the way homes are marketed for sale on Rightmove, shifting the several thousand pound cost from the estate agency on to the seller of the property.
REA charges sellers to advertise their properties, but also earns fees from estate agents for buyer lead introductions and other services.
In Britain, sellers pay commission to estate agents who may attempt to make the client pay for advertising, although this is difficult in the ultra-competitive market for property instructions.
This month REA has made four attempts to acquire Rightmove, which has a near monopoly in the UK property listings sector attracting 80 per cent of searches.
But the Australian suitor has been cold-shouldered. There is increasing bewilderment over Rightmove’s refusal to talk to REA which on Friday made a fourth successive offer for its prey.
The £7.81-per-share offer – under which investors would receive for each share £3.46 in cash, 0.0417 of a new REA share and a special cash dividend of 6p – puts a value of £6.1 billion on Rightmove.
One observer professed amazement over Rightmove bosses’ disinclination to negotiate, commenting: ‘That’s a big premium over Rightmove’s £5.40 average share price this year – too good a price for Rightmove to refuse to engage.
‘No wonder REA is encouraging shareholders to put pressure on the Rightmove board to start a discussion.’
Some shareholders have called for negotiations to start. But Nick Train of Lindsell Train, manager of the Finsbury Income & Growth Trust and other popular funds, is staying silent, telling The Mail on Sunday that it was too early to comment on the situation.
Train has a 7 per cent stake, built up in October 2023, when Rightmove shares had slumped to about £4.80, in the wake of the purchase of the smaller OnTheMarket website by the US real estate analytics group CoStar.
At the time there was talk that OnTheMarket could become the UK’s number one website, but to date it has not happened.
The mood of Rightmove investors may begin to grow more restive in coming days.
But some Australian investors are unhappy, alarmed over the potential for the dilution of their holdings to finance the acquisition. REA has been a highly-rated growth stock.
Shares have risen by 30 per cent over the past 12 months. But if it fails to buy Rightmove more questions will be asked over its
ability to expand beyond its Australian heartland.
Rightmove’s plans to turn its website into a one-stop shop for anyone looking for a home to buy or to rent are likely to form the foundation of its defence should REA’s bid turn aggressive.
Mortgages would be at the heart of this expansion, outlined months ago by chief executive Johan Svanstrom.
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