Australian property portal, Mortgage Broker owner goes big, tries to involve shareholders to try to grab UK giant
Australian property company REA Group, which owns mortgage broking giant Mortgage Choice, has increased its bid for UK-based Rightmove, intensifying efforts to complete a multibillion-dollar acquisition before the rapidly approaching deadline. After three previously rejected bids, REA's latest offer values Rightmove at £6.2 billion, an increase from the prior £6.1 billion bid.
The offer comprises a combination of cash and shares, priced at 775p per share, representing a 17% premium to Rightmove’s closing price on Thursday. The package also includes a 6p special dividend.
REA, which is 61% owned by Rupert Murdoch’s News Corp, has also altered the structure of the offer by increasing the cash component to 346p per share while reducing the share element to 0.0417 new REA shares. This shift is intended to make the proposal more attractive to Rightmove’s shareholders.
Owen Wilson, CEO of REA Group, emphasized the company’s strategic vision for combining the leading digital property platforms in Australia and the UK. “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,” Wilson stated.
The acquisition attempts come as Rightmove faces increased competition from U.S.-based CoStar, which recently acquired OnTheMarket, a rival UK property platform, and improved performance by competitor Zoopla. Despite this, Rightmove still commands a significant 86% share of the house search market in Britain and enjoys strong profitability, making it an attractive target for REA.
While Rightmove has rejected earlier bids, some shareholders have expressed interest in engaging with REA. Jamie Forbes-Wilson from Axa Investment Managers, holding 1% of Rightmove, remarked that although the timing seemed “a little opportunistic,” it recognised Rightmove as the high-quality business that REA sees.
The latest developments come as REA may be seeking to secure a multibillion-dollar bridge loan to finance the acquisition, having reportedly been in talks with institutions such as Bank of America and Deutsche Bank. Insiders suggest that the loan could reach $5 billion, although the precise amount remains undetermined.
With just days remaining before the October 1 (AEST) deadline set by UK takeover regulations, the clock is ticking for both REA and Rightmove’s board to reach an agreement. If no formal offer is made by the deadline, REA would be blocked from making further bids for six months unless an extension is agreed upon. REA has called on Rightmove shareholders to press the board for constructive talks, noting that failure to engage could result in missed opportunities for both parties.
This latest twist highlights the high stakes involved as REA looks to expand its global footprint through the acquisition of Rightmove and to potentially start brokering mortgage products in the UK, while Rightmove navigates an increasingly competitive market at home.
Rightmove’s CEO, Johan Svanstrom, has already identified mortgage services as a critical growth area for the UK platform. By integrating REA’s Mortgage Choice expertise, Rightmove could potentially turbocharge this sector, offering a more comprehensive home-buying experience for its users.
Whether REA’s revised offer will be enough to sway the Rightmove board remains to be seen.
