Rightmove has called out property listings group REA group for ‘fundamentally undervaluing’ them after the online property portal rejected an offer of £5.6billion.
Australian owned REA, which is part of Rupert Murdoch’s News Corp, approached the company with an ‘unsolicited, highly conditional’ proposal – which according to their board was ‘opportunistic’.
Based on REA’s closing share price on September 10, the proposal would value each Rightmove share at 698p, or £5.5billion. The Proposal was 305 pence in cash and 0.0381 new REA shares for each Rightmove ordinary share.
Rightmove say that they carefully considered the bid, with aid from financial advisers, but concluded that it was ‘wholly opportunistic and fundamentally undervalued Rightmove and its future prospects’. Following consideration the business rejected the offer unanimously.
The Mirror reported that under the potential deal’s terms, Rightmove investors would own around 18.6 per cent of the enlarged group. REA’s proposal included applying for a secondary listing in London post-takeover, with shares traded on both the London Stock Exchange and the Australian Securities Exchange.
REA have commented saying that this would allow a ‘broader pool of investors to gain exposure to a global and diversified digital property company on the London Stock Exchange’.
The property listings company added that the deal would ‘unlock value for both Rightmove and REA shareholders by creating a global and diversified digital property company, with strong margins and significant cash generation, underpinned by number one positions in Australia and the UK’.
Rightmove have announced their refusal without the approval of REA and it is not certain whether any further offers will take place.
Any offer for Rightmove is governed by the City Code on Takeovers and Mergers. According to their Code, REA must, by not later than 5.00 p.m. on 30 September, either announce a firm intention to make an offer for the company.
