Rightmove tells shareholders to 'take no action' over £6.2bn REA offer

27th Sep 2024 16:06

(Sharecast News) - Rightmove responded to a fourth unsolicited and "highly conditional" acquisition proposal from REA Group on Friday afternoon, urging shareholders to take no action while it considered the deal.

The offer, announced by the News Corp-controlled firm on Friday morning, valued the UK property portal at 775p per share.

It included 346p in cash, 0.0417 new REA shares per Rightmove share, and a special dividend of 6p in lieu of any final dividend for 2024.

The latest proposal followed three previous offers from the Australian digital real estate company, all of which were rejected by Rightmove's board.

It came just days before the 30 September deadline set by the UK Takeover Code, which would require REA to either make a firm offer or withdraw its bid.

REA voiced its frustration over the lack of engagement from Rightmove's board in its fourth proposal, appealing directly to shareholders to support the deal.

Its offer also included a mix-and-match facility, allowing shareholders to adjust the proportions of cash and shares they receive.

REA argued that the acquisition would create a global digital property leader with significant growth potential, backed by strong financials and a planned leverage reduction post-transaction.

However, Rightmove's board was yet to indicate any willingness to engage, urging shareholders to take no action until it had thoroughly reviewed the proposal with its financial advisers in a statement released last on Friday.

Dan Coatsworth, investment analyst at AJ Bell, quipped that REA "doesn't seem to get" the message.

"The first three offers were rejected on the grounds they 'materially' undervalued the company," he noted.

"There is no way that Rightmove is going to change its tune simply for an extra 5p per share versus the previous offer and a 6p special dividend on top.

"To really get this deal over the line, REA needs to consider an all-cash offer and one that starts with an '8' and not a '7'."

Coatsworth said shareholders knew they were holding a unique asset for the UK stock market, and the UK market leader for property portals, and were not going to give that up unless REA paid a premium price.

"The average takeover premium for UK stocks last year was 51% yet REA is only offering a 45% premium now.

"It needs to dig a lot deeper or walk away."

At 1603 BST, shares in Rightmove were up 0.96% at 671.4p.

Reporting by Josh White for Sharecast.com.