Rightmove rebuffs Murdoch-backed REA

Rightmove has rejected an initial cash and shares bid from Australia’s REA Group that had valued the UK business at £5.6bn. The initial proposal by REA, which is controlled by Rupert Murdoch’s News Corp, valued Rightmove at 705p per share – a 27% premium to its pre-potential bid share price. REA announced that it was considering a takeover of the UK firm on 2 September, citing “clear similarities” between the two businesses and saying that a potential acquisition was a “transformational opportunity”. The Australian firm made a non-binding indicative proposal to Rightmove on 5 September, but on 10 September was informed that the board had rejected the offer The indicative offer comprised 305p a share in cash and the rest in REA stock which, at the time of the offer, traded at A$205.51 (£104.43). REA said Rightmove shareholders would own 18.6% of the combined company based on its indicative offer and that it intended to seek a secondary listing on the London Stock Exchange to allow UK investors to trade the shares. “The proposal combines certainty of value, in cash, at a significant premium to recent trading while at the same time giving Rightmove shareholders the opportunity to benefit from the future value creation of the combined business,” said REA. The group added that its proposal represented a “highly compelling proposition” to unlock value for both Rightmove and REA shareholders by “creating a global and diversified digital property company, with strong margins and significant cash generation, underpinned by number one positions in Australia and the UK”. Rightmove said it had “carefully considered” the proposed bid and concluded that it was “wholly opportunistic and fundamentally undervalued Rightmove and its future prospects”. It is urging shareholders to take no action in respect of the proposed offer. Under UK takeover laws, REA has until 30 September to make a formal offer or walk away.