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REA, the Australian property platform controlled by Rupert Murdoch’s News Corp, has abandoned its pursuit of the UK’s biggest listing website Rightmove, after its latest £6.2bn bid was rebuffed.
Rightmove’s shares were down by about 7 per cent on Monday afternoon after REA walked away, blaming the UK group’s lack of engagement with its previous offers. The UK’s “put up or shut up” rules required REA to make a final offer by 5pm, or give up, after Rightmove rejected its latest offer on Monday morning.
REA said the first “substantive engagement” from Rightmove was a pair of meetings over the weekend, despite the Australian group making four offers over the past month. It said all other contact had been “cursory and procedural”.
“We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us,” said Owen Wilson, chief executive of REA.
In a statement, News Corp chief executive Robert Thomson said the company backed REA’s decision to end its pursuit of Rightmove. “We applaud REA’s financial discipline as it is foolhardy to overpay for an asset, even if it patently had positive potential,” he added.
The decision to rebuff REA will increase pressure on Rightmove to show it can expand its business, despite enjoying a huge share of the UK listings market.
“Rightmove’s share price has lacked any sustained upward momentum for two years despite being supported by its ongoing share buyback programme and revised strategy,” REA said.
The FTSE 100 UK property group earlier on Monday said it had consulted “the full spectrum of its shareholder base” but concluded that the cash and shares offer on the table was “unattractive” and continued to “materially undervalue Rightmove”.
“We respect REA and the success they have achieved in their domestic market. However, we remain confident in the standalone future of Rightmove,” said Andrew Fisher, Rightmove’s chair.
The latest offer from the Australian group, which is independently listed but majority owned by News Corp, was at an implied value of 781p a share, which REA said was a 41 per cent premium to the UK group’s share price prior to the takeover interest becoming public this month.
REA pledged to maintain a secondary listing on the London Stock Exchange if the deal went through, to allow UK investors easy access to the stock.
Rightmove has been pushing into new areas such as mortgage services and commercial property in search of further growth.
REA has said its experience could help boost those efforts. CEO Wilson told the Financial Times last week that his company was “much further progressed and much more successful” in key add-on business areas.
REA has criticised Rightmove for its lack of engagement over previous offers. Rightmove on Monday said the two companies’ management teams had had “numerous interactions” over many years, “including discussions around strategy and best practice as recently as June”.
The UK company said “Rightmove has taken every phone call that REA has made since its interest was first made public” and that its level of engagement was “customary and appropriate” for an unsolicited approach.
Additional reporting by Ivan Levingston
