News Corp applauds Australia’s REA Group for abandoning attempted takeover of Rightmove – as it happened

As the dust settles on REA’s attempt to buy Rightmove, here’s our story on today’s drama:

And here’s the rest of today’s business news so far:

The UK government has announced it will not introduce mandatory ‘not for EU’ labels on all meat and dairy products sold across Britain next month.

The Department for Environment, Food & Rural Affairs says that, “following consultation”, the UK government will not proceed with the introduction of ‘not for EU’ labelling in Great Britain on a mandatory basis on 1 October 2024.

DEFRA added that it will “develop” legislation to apply ‘not for EU’ labelling in Great Britain in the future in a targeted way, if it sees evidence they are needed.

Hat-tip to my colleague Jack Simpson, who reported almost two weeks ago that the policy, devised by the former Conservative government, would not go ahead next month.

Here’s Susannah Streeter, head of money and markets at Hargreaves Lansdown, on the denouement in the battle for Rightmove today:

“REA Group has given up knocking on the door of Rightmove, after the property portal refused to open up. It decided the offers were too low, given the opportunities for growth ahead. Rightmove’s unwillingness to engage with REA Group shows how far away the latest proposal is from what the board would have required to start a due diligence process.

It’s easy to see why REA Group was interested in Rightmove. It runs property websites and indices across Australia, Asia and North America, so getting a dominant foothold in the UK would have been very attractive.

Streeter adds that “there remains a glimmer of hope” that perhaps another suitor may step in with a higher offer, as REA walks away.

Sentiment around the property sector has been improving, with interest rate cuts eyed on the horizon and a house price revival in September. However, there are still risks ahead to the Rightmove model.

The number of estate agents is falling, as DIY alternatives grow in popularity and more estate agents look set to be forced out of business.

This could hamper the ability to cross-sell premium advertising packages. Right now though, today’s estate agents can ill-afford not to advertise on Rightmove. ‘’

Rightmove has now issued a statement to the City, saying its board is “confident’ in the company’s prospects.

It reiterates that it could not recommend REA’s proposed offer to shareholders, as they were “unattractive and materially undervalued Rightmove”.

Rightmove’s chair Andrew Fisher says:

“The Board of Rightmove is grateful to all of its shareholders who have engaged and shared views through this process.

Rightmove is an amazing business with a very strong team and a clear strategy. We are confident that we will deliver significant future value for shareholders.”

Rightmove gives five reasons for its confidence:

• Rightmove’s business model has proven itself able to deliver strong outcomes in all operating environments

• A clear strategy in place to deliver long term and profitable growth

• Well positioned to drive innovation and digitisation through the entire property transaction chain, powered by unrivalled market data and insights

• Together with the Core business [estate agency and new homes], Strategic Growth Areas [commercial property, rental services and mortgages] will deliver a higher-growth, more diversified business, and an even stronger platform

• The Board is confident that Rightmove’s experienced and high-quality management team will continue to successfully drive the Group to create significant value for shareholders

Robert Thomson, the chief executive of News Corp, has backed REA’s decision to abandon its attempts to buy Rightmove.

Thomson says:

“We strongly support the decision by the REA team to withdraw from the potential acquisition of Rightmove. We applaud REA’s financial discipline as it is foolhardy to overpay for an asset, even if it patently had positive potential.

Reminder: Rupert Murdoch’s News Corp is the majority owner of REA

Thomson doffs his cap to the media baron’s favoured son, who persuaded his father to take a stake in REA shortly after the turn of the century, saying:

Financial discipline has been at the heart of the transformation of News Corp and our recent successful acquisitions for Dow Jones and HarperCollins reflect that core principle. Thanks to Lachlan Murdoch’s savvy investment in REA, digital property has become an important engine of growth at News Corp.

We have no doubt that REA will continue to successfully expand into auspicious adjacencies and are excited by their progress in India, where the company is now the market leader and benefitting from the express economic growth in the world’s largest country.

He wraps up with a jibe at Rightmove’s board, saying:

As for Rightmove, we wish them well in an increasingly competitive British market – unfortunately, the company’s Board did not make the right move.”

This chart shows how Rightmove’s shares have fallen to a one-month low today, as its spurned Australian suiter walks away.

But as you’ll see, they’re still over 10% higher than before REA Group made its first approach.

REA has been critical of Rightmove’s share price performance in recent years, saying today:

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 announced at last year’s Capital Markets Day.

Rightmove’s board will now have to prove to shareholders that it was right to rebuff REA, and deliver on its claim that the company has strong “standalone prospects”.

Newsflash: Australia’s REA Group has abandoned its efforts to take control of Rightmove.

After seeing its fourth offer rebutted this morning, REA has now conceded defeat and walked away from its pursuit of the UK property portal.

In a statement to the City, REA – backed by Rupert Murdoch’s News Corp – says it will not make an firm bid for Rightmove.

REA had to make a decision on whether to bid, or walk away, by 5pm today.

Owen Wilson, CEO of REA, insists that the deal would have benefitted both company’s shareholders.

And he again criticises Rightmove for not fully engaging with REA, saying:

“Against a backdrop of intensifying global competition, we approached Rightmove’s Board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders. 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.

“We are always financially disciplined when we look at M&A and reinvestment in our business and will continue to focus on the many other opportunities ahead of us. Our recent investment in Athena Home Loans is a great example of this. We have a clear strategy to expand in our core business and adjacent markets, and India represents an exceptional opportunity for growth. We look forward to pursuing these opportunities and generating further value for REA shareholders.”

As we covered this morning, Rightmove rejected REA’s fourth offer, worth £6.2bn, before the stock market opened. It said the latest proposal “remains unattractive and continues to materially undervalue Rightmove”.

Rightmove shares have suddenly extended their earlier losses, and are now down 7.5% at 620p.

That’s down from 668p on Friday night, and taking them further away from REA Group’s now-rejected offer of 780p.

There’s now just five hours until the Put Up Or Shut Up deadline for a firm bid is hit.

The City might be anticipating that REA will be forced to to walk away at 5pm, rather than come up with a bid that is lucrative enough to attract Rightmove.