Rupert Murdoch-backed REA Group set to increase takeover bid for Rightmove
Australian real estate giant REA Group, which is backed by Rupert Murdoch, is reportedly considering upping its bid for the British property platform Rightmove.
After Rightmove formally rejected REA’s £5.6bn bid last week, REA executives are considering making a higher second offer, The Mail on Sunday reported.
The board said last week that REA’s initial offer was “wholly opportunistic and fundamentally undervalued Rightmove and its future prospects,” and chose to reject the proposal.
Under UK takeover rules, REA has until 30 September to make a firm offer for Rightmove – but another bid could come as early as this week, the report said.
Analysts have said that a deal closer to £6bn was needed to win over Rightmove.
Peel Hunt analysts said the offer “would need to be substantially sweetened to get [it] over the line.”
Earlier this week, Jefferies upgraded its rating for the British firm from ‘underperform’ to ‘hold’, citing a “meaningful likelihood” that REA will follow through with its bid.
Although there is “limited” strategic logic for REA to buy Rightmove, it said, the financial appeal is “compelling” as REA’s premium equity and debt-free balance sheet puts it in a prime position for a low-risk deal.
Analysts at Panmure Liberum, however, disagreed, and said that a deal looks “unlikely to come” as it questioned REA’s ability to pay a premium for the property portal.
Rightmove is the UK’s leading property platform, which is said to control more than 80 per cent of the UK listings market. It is also the most profitable company on the London Stock Exchange’s FTSE 100 index.
Shareholders know this, and won’t let an opportunistic bid go through, AJ Bell analyst Russ Mould said.
“Now comes the interesting part where we see if REA is serious in its pursuit for Rightmove, or whether it was simply trying its luck at a bargain price,” Mould said.
CityAM contacted Rightmove for comment.
REA Group declined to comment.