REA Group Ltd, a subsidiary of Rupert Murdoch’s News Corp., is contemplating a takeover offer for UK property portal Rightmove Plc as part of its strategy to establish a global digital real estate company. The Australian property listing giant disclosed on Monday that it is exploring a potential cash and share bid for Rightmove but has yet to initiate discussions with the company.
REA’s announcement led to a 5.3% drop in its shares on the Sydney Stock Exchange, the largest decline since December 2022, amid speculation about a possible stock issuance to finance the acquisition. Conversely, Rightmove’s shares surged by up to 25% in London, increasing its market value by approximately £1 billion to £5.4 billion ($7.1 billion).
A successful acquisition of Rightmove would significantly expand REA’s footprint. The company, currently the leading player in the Australian online real estate market, has also ventured into other regions such as India. Rightmove, known for its steady revenue growth, is well-positioned to benefit from an anticipated recovery in the UK housing market as interest rates decline.
REA’s intention to bid, prompted by media speculation, now obliges the company to clarify its position by September 30 at 5 p.m. London time, in accordance with the UK’s takeover regulations.
In a statement, REA emphasized that merging with Rightmove could unlock substantial shareholder value and enhance the combined entity’s growth prospects. The company pledged to introduce further investment and innovation to Rightmove, aiming to drive robust growth and substantial shareholder returns.
However, analysts at Bloomberg Intelligence caution that the transaction would necessitate an equity raise of at least A$6.1 billion, about 23% of REA’s current market capitalization, potentially introducing execution risks and impacting shareholder returns.
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