The battle for Rightmove is turning increasingly toxic after the property website rejected a third takeover bid from a rival backed by Rupert Murdoch.
The FTSE 100 firm branded the 770p-a-share offer from Australia’s Rea Group, which values the website at £6.1billion, ‘unattractive’ and said that it ‘materially undervalues’ the business.
The rejection sparked a furious response from Rea, which is 61 per cent-owned by Murdoch’s News Corp.
The Melbourne business blasted Rightmove’s board and urged the UK company’s shareholders to put pressure on directors to enter talks.
Takeover bid: Australian property website Rea, which is 61% owned by media tycoon Rupert Murdoch’s (pictured) News Corp, has had a third offer for Rightmove rejected
Rea chief executive Owen Wilson said it was ‘incredibly disappointing’ that Rightmove would not engage.
Rightmove has rejected three bids from Rea, with the first two valuing it at £5.6billion and £5.9billion.
Analysts said Rea could attempt a hostile takeover, meaning it would bypass the board and deal directly with shareholders in a bid to take control.
The Mail understands that the Australian company wants to come to an agreement rather than pursue a hostile takeover.
Reacting to the latest offer from Rea, a statement from Rightmove said: ‘The increased proposal continues to be unattractive and materially undervalues the company and its future prospects.’
The battle for Rightmove comes as the UK housing market is showing signs of recovery after a period of weaker demand which has been caused by high mortgage costs.
The recovery is expected to boost Rightmove’s shares and profits. Rea said it was ‘disappointed by the latest rejection’ and frustrated that there has been ‘no substantive engagement with Rightmove’.
‘I was very hopeful we’d be engaging with them at this point in time,’ Wilson told the Financial Times.
The company has held talks with Rightmove’s major shareholders about getting bosses to come to the table.
‘Rea urges Rightmove shareholders to encourage the board of directors of Rightmove to engage in constructive discussions with Rea to work towards a recommended transaction,’ the Australian firm said.
Analysts at Jefferies said that Rea’s appeal to investors could be ‘a last throw of the dice’ to get Rightmove to engage with it before a September 30 deadline under the City code on takeovers and mergers.
Russ Mould, investment director at AJ Bell said: ‘Rea looks to be running out of patience with Rightmove after it rejected a third takeover proposal, banging the drum even louder that it’s bad form not to properly engage in a conversation.’
He added: ‘This sets the tone for Rea taking a hostile approach, bypassing the board and negotiating directly with shareholders. Rightmove’s biggest investors are asset management firms and they will all have a price at which they’d be happy to let their shares go.
‘They’re holding Rightmove stock to make money and it’s clear that Rea continues to want the business.’
Panmure Liberum analysts said that they thought Rea’s ‘toughening of language’ suggested ‘it will likely choose to approach shareholders over the Rightmove board at this stage, if it hasn’t already’.
But the analysts added: ‘We don’t believe this is likely to change much, and continue to believe that a deal is unlikely to be found.’
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
