CoStar acquires OnTheMarket for £100m

CoStar, the £33 billion global property data giant, has solidified its acquisition of OnTheMarket (OTM) for £100 million.

The new owners plan to embark on a marketing campaign – earmarking £46.5 million in the first year post-acquisition. This investment marks the initial phase of a multi-year plan that will see millions of pounds dedicated to driving increased consumer traffic to the OnTheMarket platform. In a statement released this week, OTM said:

“OnTheMarket seeks to become the number one portal in the UK following an offer from CoStar Group.

The deal was unanimously recommended by the OnTheMarket Board while CoStar has also received irrevocable undertakings and letters of intent with respect to approximately 29.5% of OnTheMarket shares including OnTheMarket’s six largest shareholders including Spicerhaart.”

OTM also said:

“CoStar remains committed to OnTheMarket position as ‘the agents’ portal’ with fair and sustainable pricing.”

The offer, valuing each share at 110p, represents a significant premium over OTM’s current share price of 70p. This deal signifies a major shakeup in the property portal industry, with the marketing budget now surpassing Rightmove’s annual spend by over threefold and outstripping OTM’s current spending six times over.

In their interim results announcement, OnTheMarket reported a 1% increase in revenue, although Average Revenue Per Advertiser (ARPA) saw a 2% decline. The adjusted EBITDA remained steady at £3.1 million, in line with the previous year, while the adjusted operating profit of £1.1 million saw a 15% decrease.

This acquisition comes after a period of relative quiet for OnTheMarket, which saw fewer agents listing properties on their platform in the wake of a cooling economic climate. However, their revenue still managed to climb by 14%, reaching £34.45 million, and their adjusted operating profit soared by 59% to £4.3 million. A key contributor to these gains was a 12% increase in ARPA from each agent customer, rising from £188 to £210.

OTM also faced challenges in retaining some of their agent customers, with a 2% reduction in total agents to 13,086 and a 10% decrease in monthly leads per advertiser. However, their investments in technology have kept their numbers in line with the board’s expectations. Jason Tebb, CEO at OTM said:

“From a position of strength, partnering with CoStar Group will significantly accelerate our strategy with the clear target of becoming the market leader, whilst staying committed to fair and sustainable pricing.

CoStar Group will bring industry-leading global expertise and significant financial firepower to invest in OnTheMarket, allowing us to accelerate our transformation of the sector.”

Andy Florance, founder and CEO at CoStar Group, said:

“We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar Group into the estimated £8 trillion UK residential property market.

We are excited to combine CoStar Group’s resources and leading marketplace experience with OnTheMarket’s agent-focused culture to create a leading player in the UK marketplace and provide increased choice and higher quality offerings for consumers.”

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