Rightmove has rejected a £5.6bn takeover bid from the Murdoch family, describing the offer as “opportunistic” and undervaluing the online estate agent.
The bid, made by REA Group, an Australian real estate company owned by Rupert Murdoch’s News Corp, was presented last week.
It was a cash and share proposal valued at 705p per share, offering a 27% premium on Rightmove’s current market valuation.
Despite the premium, Rightmove’s board unanimously rejected the offer on Tuesday.
In a statement to investors, the board explained: “The board carefully considered the proposal, together with its financial advisers, and concluded that it was wholly opportunistic and fundamentally undervalued Rightmove and its future prospects.”
According to UK takeover regulations, REA now has until 5 pm on September 30 to either make a firm offer or withdraw from the bid.
REA, based in Melbourne and valued at A$26bn (£13bn), owns several property brands, including realestate.com, and first expressed interest in acquiring Rightmove last week.
The news caused Rightmove’s shares to surge by 25%. At the close of trading on Tuesday, the UK’s largest online property company had a market value of £5.3bn.
As part of REA’s proposed deal, Rightmove shareholders would own approximately 18.6% of the combined company’s share capital. Shareholders would also remain eligible for Rightmove’s interim dividend of 3.7 pence per share.
REA commented: “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.”
The Australian firm noted that the cash portion of the deal would be financed through third-party debt as well as existing funds. Additionally, REA, which is listed in Sydney, intends to seek a secondary listing of its shares in London.
“The secondary listing would provide the opportunity for a wider pool of investors to gain exposure to a global and diversified digital property company on the London Stock Exchange,” REA stated.
The bid comes at a time when Rightmove is facing a challenging property market, with high mortgage rates dampening buyer interest. Market activity is expected to rebound once interest rates decrease.
This move by REA also reflects the Murdoch family’s strategy to diversify beyond its traditional media businesses, as Rupert Murdoch, now 93, passes control to his eldest son, Lachlan.
The media tycoon is currently attempting to modify the terms of the family trust to grant Lachlan sole control, a decision that has led to a dispute with his other children. A legal battle over this matter is set to begin soon in a Nevada courtroom.
