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Rightmove PLC (LSE:RMV) has formally rejected a takeover offer from Australia's REA Group, led by Rupert Murdoch. REA’s proposal included 305p in cash and 0.0381 new shares for each Rightmove share, totaling 698p per share. If based on REA's closing price of A$205.51 on September 5, this implies a total offer value of 705p per share, valuing Rightmove at £5.6 billion. Under this deal, Rightmove shareholders would own approximately 18.6% of the combined group.
REA Group indicated that it would seek a secondary listing on the London Stock Exchange if the acquisition proceeded. Despite the proposal being at a 27% premium to Rightmove's share price of 556p at the end of August, and a 31% premium to the average share price over the past 12 months, Rightmove’s board deemed the offer "wholly opportunistic" and undervaluing the company's future prospects. Consequently, the board unanimously rejected the proposal on Tuesday.
REA, which is controlled by the Murdoch family’s News Corp, has until 5pm on September 30 to either make a firm bid or withdraw. The offer was priced at a multiple of 20.5 times Rightmove’s underlying earnings (EBITDA) for the year ending June 2024, estimated at £272 million. REA's proposal was described as providing "certainty of value" with a substantial premium, while also offering Rightmove shareholders the opportunity to benefit from the future growth of the combined entity.
According to REA, the deal would create a "global and diversified digital property company" with strong margins and significant cash flow. The acquisition was portrayed as a means to enhance shareholder value and leverage REA’s experience to support Rightmove’s expansion ambitions.
Following the announcement, Rightmove shares experienced an initial decline but subsequently rose nearly 1% to 676.6p.
