REA Group, an Australian property listings company controlled by Rupert Murdoch’s News Corp, announced on Monday that it is considering acquiring Rightmove, a UK property portal.
This move aims to create a global digital real estate business.
The Melbourne-based REA Group has stated that it is considering a cash and share offer for Rightmove, but has not yet initiated any formal discussions with the UK company. Rightmove’s shares rose 25% in early trading after the announcement, and were up 20.9% by 12:32 p.m. GMT, making it one of the top performers on the FTSE 100. In contrast, REA Group’s shares fell by up to 6%.
Rightmove, the UK’s leading property portal, facilitates property listings for sale and rent, with a market valuation of £4.34 billion ($5.7 billion) as of Friday’s close. The company has not released a statement about the potential acquisition and has not responded to requests for comment.
REA Group’s consideration of a takeover comes after reports that it is working with Deutsche Bank on a major overseas acquisition. The company views the potential acquisition of Rightmove as a “transformational opportunity,” citing the two companies’ similarities in terms of brand recognition, market share, and cultural values.
REA Group, which operates property websites in Australia, India, and the United States, previously faced challenges in the UK market after selling its real estate site PropertyFinder Group to Rightmove rival Zoopla in 2009. However, given the current favorable conditions in the UK property market, including expected lower interest rates, REA Group’s interest in Rightmove appears strategic.
Despite increased market competition, Jefferies analysts believe REA Group’s strong management and expertise will benefit Rightmove’s strategic growth areas, such as mortgages, commercial services, and rentals. Analysts also suggested that Rightmove could benefit from REA Group’s successful operational strategies.
Under UK takeover rules, REA Group has until the end of September to make a formal offer for Rightmove or withdraw its interest. If completed, the deal would be a significant acquisition for an Australian firm and one of the largest transactions involving a UK-listed company this year.
