REA Group has discontinued its proposal to takeover Rightmove after its fourth offer to purchase the company for £6.2bn was rejected.
Rightmove said its board “carefully considered” the terms of each condition put forward by REA Group, an Australian digital advertising firm and operator of property websites which is parented by the Murdoch family’s News Corp.
The group made its first offer for Rightmove at the start of September, but the property listing firm described the first two bids as “uncertain, highly opportunistic and unattractive” and last week said the third proposal was “unattractive”.
Again, Rightmove’s board decided that the fourth bid for a takeover was “unattractive and materially undervalues” the company.
The property listing firm said its shareholders’ interests would be “better served through the execution of Rightmove’s standalone strategic plan, with the multiple paths for long-term value creation which were laid out at the Capital Markets Day in November 2023”.
At the time, Rightmove said it wanted to increase its revenue and profit growth.
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Rightmove said its teams and the REA Group had “known one another for many years, and have had numerous interactions, including discussions around strategy and best practice as recently as June”.
Following the latest proposal, Andrew Fisher, chair of Rightmove, met with Hamish McLennan, chair of REA, to allow McLennan to present the offer in person.
Rightmove said: “No information was presented in either meeting which was materially new or different to the information which has been previously presented publicly by REA.
“Furthermore, nothing was presented in either meeting which materially changed the board’s view of the latest proposal. In addition, the meetings confirmed Rightmove’s confidence in its current strategy and execution within a UK context.”
REA Group asked for an extension to the ‘Put Up or Shut Up’ deadline to access due diligence information which would be considered in a fifth proposal.
This takeover code requires companies to announce their intention to propose a takeover within a 28-day deadline.
Rightmove said its business, strategy and financial results were already in the public domain and should have been sufficient for REA Group to put forward an offer within the required period.
The property listing firm said it had an “exciting strategy to drive long-term growth and returns” and was “well positioned to drive digitisation through the entire transaction chain, powered by unrivalled market data and insights”.
Fisher said: “We respect REA and the success they have achieved in their domestic market. However, we remain confident in the standalone future of Rightmove. Rightmove has been the leading operator in the UK for over 20 years, and it has differentiated market presence, branding and technology, and very significant opportunities for future growth.
“The last few weeks have been very disruptive, as well as unsettling for our colleagues.”
He added: “Our world-class team is executing against our strategic plan, and continuing to drive innovation and accelerate growth to deliver compelling shareholder value.”
‘Disappointment’ at rejected takeover of Rightmove
Following the rejection, REA Group released a statement saying the merger would have allowed Rightmove’s shareholders to take part in a “fast growing, diversified, global leader whilst receiving value certainty in an operating environment challenged by increased market competition”.
It also said the property listing firm’s share price has “lacked any sustained upward momentum for two years” and said there was a “lack of meaningful engagement” from Rightmove regarding the possible takeover.
REA Group added: “The potential acquisition of Rightmove was dependent on coming to an agreement at a fair price, which would have required meaningful engagement and a constructive dialogue.”
Owen Wilson, CEO of REA, said: “Against a backdrop of intensifying global competition, we approached Rightmove’s board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders. We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us.
“We are always financially disciplined when we look at mergers and acquisitions and reinvestment in our business and will continue to focus on the many other opportunities ahead of us. Our recent investment in Athena Home Loans is a great example of this. We have a clear strategy to expand in our core business and adjacent markets, and India represents an exceptional opportunity for growth. We look forward to pursuing these opportunities and generating further value for REA shareholders.”
