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Rightmove said on Wednesday it had rejected a third offer from Australian rival REA Group, describing the bid as “unattractive”.
The UK property listings company said the offer materially undervalued its prospects. Its shares fell by 1.5 per cent to about 672 pence, giving it a market value of about £5.4bn. REA had made the cash-and-shares offer on Sunday, saying it valued the UK company at £6.1bn.
In an interview on Tuesday in London, REA’s chief executive Owen Wilson said Rightmove had refused to engage in talks, which was “incredibly disappointing”.
“Any way you look at it, we think it’s a compelling proposition,” said Wilson, who has led REA since 2019. “I was very hopeful we’d be engaging with them at this point in time.”
Andrew Fisher, Rightmove’s board chair, had taken every call with REA that had been offered, said one person close to the UK group.
GCQ, an Australian-listed fund manager among the top 20 active shareholders in Rightmove, commended the UK company’s board this week for having rejected the first two REA offers. But GCQ urged them to enter talks based on the terms of the third offer.
“We strongly encourage your board to commence engagement,” said the fund, arguing that a combination “makes strategic sense”.
REA, which is majority-controlled by Rupert Murdoch’s News Corp, has until the end of September to make a formal offer or walk away under UK takeover rules.
“Given the lack of communication between the two and the large equity component, we see the probability of deal completion as quite low,” Citigroup analysts wrote in a note on Wednesday.
News Corp has been under pressure from activist investors led by US investor Starboard Value to unlock value by separating its property listings assets from the wider media operations.
Wilson said that while News Corp owned 61 per cent of REA, Murdoch’s involvement with the company had been “absolutely misunderstood” and that “they have allowed us to run a completely separate business and to run our own race”.
Founded in a Melbourne garage almost three decades ago, REA has grown to become one of the most lucrative parts of the News Corp empire since the Murdoch company invested in the business more than two decades ago.
REA generated about A$1.5bn ($1bn) of revenue last year resulting in A$461mn of net profit after taking tax into account. The company’s stock has roughly doubled over the past five years and it now trades at a market capitalisation of about A$25.4bn.
Wilson said that REA’s cash-and-shares offer, which would hand 20 per cent of the enlarged company to Rightmove shareholders, should be acceptable to UK investors because the Australian company was planning a secondary listing on the London Stock Exchange as part of the takeover.
REA also has businesses in areas including mortgage broking and property data. Wilson said the stock portion of REA’s proposal would give Rightmove shareholders “the opportunity” to participate in its large and growing business.
While REA has not yet declared its offer “best and final,” Wilson declined to discuss whether there was scope for a further improved bid.
“We’re incredibly disciplined,” he said. “We really need to see some level of engagement.”
Rightmove declined to comment.
