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Shares of REA Group Ltd (ASX:REA) are experiencing a strong performance today, with the stock price climbing 3% to AU$198.50 as of the latest trading update. Investors are reacting positively to a combination of significant announcements from the online property listings company, which operates the popular realestate.com.au platform.
UK Takeover Attempt Ends
One major factor contributing to the increase in REA Group’s share price is the news regarding its takeover bid for UK-based Rightmove (LSE:RMV). The Rightmove Board of Directors has officially rejected REA's improved offer, characterizing it as “unattractive” and “materially undervaluing” the company. REA expressed disappointment over this decision and highlighted its frustration with the lack of substantive engagement from Rightmove since it submitted its initial proposals.
In an effort to pressure Rightmove’s board, REA has urged shareholders to advocate for more constructive discussions. However, the timeline is tight for REA; UK takeover laws stipulate that the company has until September 30, 2024, to submit a firm offer. If REA fails to do so, it will be barred from making another bid for six months, creating urgency for the company to navigate this situation effectively.
Strategic Acquisition of Athena Home Loans
In a more favorable turn of events, REA Group announced its agreement to acquire a 19.9% stake in Athena Home Loans for AU$62 million. This acquisition marks a significant investment in one of Australia's fastest-growing digital non-bank lenders. Funding for the acquisition will come from REA’s existing cash reserves, and the company plans to appoint two representatives to Athena’s board.
REA and Athena are not unfamiliar with each other; their partnership dates back to 2022, when they first collaborated to integrate Athena’s home loan products with REA’s financial services brand, Mortgage Choice. This strategic partnership has already borne fruit, with the launch of the Mortgage Choice Freedom suite of white-label products in June 2023, achieving AU$1.2 billion in settlements during FY 2024.
CEO’s Perspective
REA Group’s CEO, Owen Wilson, expressed enthusiasm about the investment in Athena, stating, “REA's proposed investment in Athena will further enhance our existing partnership and reinforces our commitment to providing Australian homebuyers with greater choice and a seamless consumer experience when finding and financing property.” This sentiment aligns with REA's broader goal of expanding its service offerings and enhancing its position in the competitive property market.
Market Reaction
The combination of these developments has created a positive atmosphere for REA Group’s stock. While the rejection of the Rightmove takeover bid might have initially appeared negative, investors seem to be viewing the company’s strategic focus on partnerships and acquisitions more favorably. The acquisition of a stake in Athena Home Loans highlights REA's commitment to growth and innovation within the property financing sector.
