(Bloomberg) -- Rightmove Plc, the UK’s biggest property portal by market share, rejected a £5.6 billion ($7.3 billion) takeover proposal from Australia’s REA Group Ltd., saying the bid undervalued the company and its future prospects.
REA, part of media mogul Rupert Murdoch’s empire, submitted a preliminary cash-and-stock offer on Sept. 5, valuing each Rightmove share at 705 pence, according to a statement confirming an earlier report by Bloomberg News.
Rightmove shareholders would receive 305 pence in cash and 0.0381 new REA shares for each share of the London-listed company, REA said in the statement. The offer represents a premium of 26% to the British portal’s share price on Aug. 30, the last trading day before news of REA’s interest leaked, Rightmove said in a separate statement on Wednesday.
“The board carefully considered the proposal, together with its financial advisers, and concluded that it was wholly opportunistic and fundamentally undervalued Rightmove and its future prospects” and unanimously rejected it, Rightmove said in its statement.
Richmond, Victoria-based REA is pursuing Rightmove because a potential acquisition would boost the scale of REA, which is the largest player in the Australian online real estate industry and has already expanded into other markets including India.
While Rightmove enjoys the largest market share in the UK property portal market, competition has intensified. OnTheMarket Plc recently launched an expansion drive after being acquired by US real estate firm CoStar Group Inc. In other major deals in the sector, private equity firm Silver Lake acquired property platform ZPG Plc for almost £2.2 billion in 2018.
Initial proposals are often rejected as being too low. REA said in its statement that after it made its non-binding indicative proposal to the Rightmove board on Sept. 5, it was informed five days later that the board had rejected it. REA has until 5 p.m. London time on Sept. 30 to announce a firm intention on whether to make a bid.
Shares of Righmove, whose market value was £5.3 billion on Tuesday, declined as much as 2.4% in early London trading on Wednesday, while REA’s shares closed 2.2% down in Sydney.
A deal for Rightmove would add to a range of UK-listed firms that have gotten foreign takeover interest this year, from gold miner Centamin Plc to the parent of Royal Mail. Beverage maker Britvic Plc and packaging firm DS Smith Plc have also received bids from overseas.
--With assistance from Charles Capel, Angus Whitley, Georgina McKay and Sam Nagarajan.
(Updates with Rightmove’s statement in fourth paragraph.)
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