Rightmove has turned down a £5.6 billion takeover bid from Rupert Murdoch’s REA Group. The rejection was unanimous among Rightmove’s board.
- REA Group offered a 27% premium on Rightmove’s current valuation.
- The bid was deemed opportunistic and undervaluing Rightmove’s future prospects.
- REA has until September 30 to formalise or withdraw its offer.
- The decision comes amid a challenging UK property market.
REA Group, controlled by Murdoch’s News Corp, proposed an indicative cash and share offer, valuing Rightmove at 705p per share, representing a 27% premium on Rightmove’s current market valuation. Despite the premium, Rightmove’s board unanimously rejected the offer, declaring it to be wholly opportunistic and fundamentally undervaluing Rightmove and its future prospects.
REA must now either formalise or withdraw its offer by 5pm on September 30, in accordance with City takeover regulations. The initial announcement from REA triggered a 25% surge in Rightmove’s share price, raising its market valuation to £5.3 billion as of Tuesday’s close.
Under the proposed deal, Rightmove shareholders would own approximately 18.6% of the combined entity’s share capital while retaining rights to an interim dividend of 3.7 pence per share. REA argued that their proposal offers a certainty of value with a significant cash component and the potential for future growth in the merged business.
The cash component of the deal would be financed through a mix of third-party debt and existing funds. Additionally, REA aims to secure a secondary listing on the London Stock Exchange, targeting a broader investor base interested in a global, diversified digital property platform.
The rejection from Rightmove occurs during a challenging period for the UK property market, with high mortgage rates affecting buyer enthusiasm. However, market activity is anticipated to improve as interest rates eventually decline.
This move aligns with a broader strategy by the Murdoch family to diversify its investments beyond traditional media ventures. Rupert Murdoch, aged 93, is transitioning leadership to his eldest son, Lachlan, and reportedly altering the family trust terms to grant Lachlan sole control, sparking potential legal battles among his children.
Rightmove’s rejection of the £5.6 billion bid from REA Group highlights the board’s confidence in its future prospects despite market challenges.
