Rightmove’s Australian suitor left waiting after fourth offer

The Australian group pursuing Rightmove was on tenterhooks on Friday after the British property platform stopped short of immediately rejecting a fourth provisional offer tabled earlier in the day.
After a hiatus of several hours, Rightmove put out a holding statement saying that it was considering the raised offer from REA Group, which values the FTSE 100 company at £6.2 billion.
Three previous offers had been rejected as unattractive, opportunistic and undervaluing a business that dominates property search in the UK.
“As it has done throughout this process, the board will consider the latest proposal together with its financial advisers and, in the meantime, shareholders are urged to take no action,” Rightmove said.
The pause suggests that Andrew Fisher, Rightmove’s chairman, will use the weekend to sound out shareholders about whether he should start to engage with REA and open Rightmove’s books to it. Under takeover rules, REA must make a firm offer or withdraw by 5pm on Monday unless Rightmove asks for an extension.
REA, which is 61 per cent-owned by News Corp, the publisher of The Times, said it believed that it was in shareholders’ interests for the Rightmove board “to engage in constructive discussions with REA to work towards a recommended transaction”.
At least two institutional shareholders, Axa and GCQ, the Australian fund manager, have urged Fisher, 55, to open discussions with REA. However, Baillie Gifford, which owns a 3.9 per cent stake, has said previously that the “unique” Rightmove must not be let go cheaply.
Analysts at Peel Hunt and Panmure Gordon expressed doubts that REA had offered enough to justify the Rightmove board opening talks.
The new proposal by REA Group is made up of a cash-and-shares package of 775p a share, which is a 17 per cent premium to Rightmove’s closing price on Thursday, and a 6p special dividend, valuing its target at £6.2 billion. It has increased the cash part of the bid to 346p per share and reduced the stock element to 0.0417 new REA shares.
The two sides have differed over whether there has been any substantive engagement already, with REA dismissing talks so far as no more than “cursory procedural telephone calls”.
Jamie Forbes-Wilson, a fund manager at Axa, which holds 1.3 per cent of Rightmove but has been reducing its stake in recent days, said after the third indicative offer: “We would agree that it feels a little opportunistic for REA to be coming along at this time, but it is also recognition that REA sees Rightmove as the high-quality business that we, as long-term holders of the share, think that it is.”
He said the third offer, which valued Rightmove at 771p a share, had been at a level at which the board should begin to “engage”, a view shared by GCQ.
Other significant shareholders, which include Lindsell Train and Generation Investment Management, a business founded by the former US vice president Al Gore, have been silent.
Rightmove’s shares have been under pressure in recent years amid concerns about increased competition in the domestic market from CoStar, the American property market powerhouse that has bought OnTheMarket, a rival property platform.
The shares, which stood at about 550p at the end of August before REA’s interest was revealed, fell i early trading but closed up 6½p, or 1 per cent, at 671½p.
Rightmove has an 86 per cent share of the house search market in Britain and enjoys high profit margins. For every £1 spent by estate agents and developers with Rightmove, it made 69p of profit in the first half. About 19,000 estate agents and developers advertise on the portal.
Owen Wilson, REA Group’s chief executive, said: “While the Rightmove board has refused to meet with us, we have enjoyed the opportunity to connect with Rightmove shareholders and to share our vision for the combination of the No 1 digital property businesses in the UK and Australia.
“We continue to see the potential for us to strengthen Rightmove and accelerate its growth. We believe it is in the interests of Rightmove shareholders for the Rightmove board to engage with us and to extend the September 30, 2024, deadline.”
Abrdn, which owns 4.7 per cent of Rightmove, declined to comment.