(Bloomberg) -- UK property portal Rightmove Plc urged REA Group Ltd. to submit its “best and final proposal” after rejecting the Australian firm’s fourth takeover bid in less than a month.
The London-listed company reiterated that the latest proposal valuing it at £6.2 billion ($8.3 billion) remains unattractive, according to a statement on Monday, and added that REA must put its final offer on the table before Monday’s 5 p.m. regulatory deadline, rejecting a request for an extension.
The latest stock-and-cash proposal implied an offer value of 780 pence apiece, plus a 6 pence dividend in cash, Rightmove said in the statement. Based on the Australian firm’s share price on Friday, the latest offer valued Rightmove 11% higher than REA’s initial bid and about 40% above the company’s market price before the takeover interest emerged.
“The board has unanimously concluded that the latest proposal is unattractive and materially undervalues Rightmove,” according to the statement. “The board has concluded that shareholder interests would be better served through the execution of Rightmove’s standalone strategic plan.”
Shares of Rightmove fell as much as 5.3% in early London trading before paring about half of those losses. They traded at 649 pence as of 9:01 a.m. local time. Shares of REA Group, which is part of media tycoon Rupert Murdoch’s empire, gained 0.5% in Sydney.
An offer price of less than 800 pence is unlikely to be accepted, and REA may need to improve it even if it turns hostile by appealing directly to Rightmove shareholders, according to a Bloomberg Intelligence report earlier.
The UK’s go-to website for property listings has grown steadily in recent years and it’s poised to benefit as declining interest rates and the Labour government’s planning reforms look set to boost the housing market. Sales are expected to rise by a further high-single-digit percentage in 2024-25, according to another BI report.
“Rightmove has said it’s been engaging directly with REA, with both companies’ chairs meeting, suggesting another proposal remains possible” before the deadline, BI analyst Tom Ward wrote in a note on Monday. Under the UK’s takeovers code, REA has until 5 p.m. on Monday to announce a firm intention on whether to make a bid.
REA is among a small number of companies suited to buying Rightmove. US real estate firm CoStar Group Inc. purchased rival property portal OnTheMarket Plc for about £100 million last year, while private equity investor Silver Lake Management already owns Zoopla Ltd., effectively ruling them both out of a deal.
Iain McCombie at fund manager Baillie Gifford — Rightmove’s fifth-largest shareholder — told investors at a conference earlier this month that the fund won’t sell its shares “cheaply.” A Baillie Gifford spokesperson said on Friday that McCombie has nothing to add to these comments.
By keeping its doors closed to REA, Rightmove has already managed to extract a quick succession of sweeteners from its suitor. The risk for Rightmove’s shareholders is that REA walks away and shares in the UK company slump.
“The last few weeks have been very disruptive,” Rightmove Chair Andrew Fisher said in the statement. “I urge them to submit a best and final proposal” before the deadline so that “we can bring certainty to this process,” he said.
In the statement, Rightmove addressed claims from REA that it was frustrated at the UK firm’s lack of engagement over a potential deal. Rightmove said it had “taken every phone call” from REA since its interest was first made public, and that two meetings involving the two companies’ chairs and executives had taken place after the latest proposal.
“Nothing was presented in either meeting which materially changed the board’s view of the latest proposal,” Rightmove said in the statement. “The meetings confirmed Rightmove’s confidence in its current strategy and execution within a UK context.”
(Updates with details and share prices in fifth paragraph.)
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