REA Group Makes Third, Improved Buyout Proposal to Rightmove

Australia's REA Group has improved its offer for UK market leader Rightmove—the third bid in less than a month—as it pursues an ambitious takeover of the portal.

The latest offer, a £6.1 billion ($8.1 billion) cash plus shares proposal, is 9.2% higher than the first bid submitted at the start of September 2024.

Rightmove has rejected both bids so far, citing opportunism and undervaluation as key factors for the portal's rebuttals.

In a statement to the Australian Stock Exchange (ASX, on which REA Group is listed), REA said:

In response to recent press speculation in relation to REA’s possible offer for Rightmove, REA confirms that on 16 September 2024 it made a revised non-binding indicative proposal to the Board of Directors of Rightmove regarding a possible cash and share offer for the entire issued and to be issued share capital of Rightmove at an implied total offer value of 749 pence for each Rightmove share.

The Improved Proposal was rejected by the Board of Directors of Rightmove on 18 September.

Further to the above, REA announces that, on 22 September 2024, it has made a further increased possible cash and share offer for the entire issued and to be issued share capital of Rightmove.

Under the terms of the Further Improved Proposal, shareholders of Rightmove would receive for each Rightmove share: 341 pence in cash and 0.0422 new REA shares.

REA firmly believes that the Further Improved Proposal represents a highly compelling proposition for Rightmove’s shareholders at a significant premium to relevant trading metrics, providing a combination of immediate value certainty in cash and at the same time giving Rightmove shareholders the opportunity to benefit from the future value creation of the combined business.

The terms of the Further Improved Proposal represent:

• an increase of 9.2 per cent. on the total value of the Initial Proposal made to the Rightmove Board of Directors on 5 September 2024;
• a 39 per cent. premium to Rightmove’s undisturbed share price of 556 pence on 30 August 2024 (being the last business day prior to the date of REA’s possible offer announcement on 2 September 2024);
• a 41 per cent. premium to Rightmove’s 6-month volume weighted average share price of 548 pence;
• a 43 per cent. premium to Rightmove’s 12-month volume weighted average share price of 540 pence;
• a 43 per cent. premium to Rightmove’s 24-month volume weighted average share price of 540 pence; and
• an enterprise value multiple of approximately 22.4x Rightmove’s EBITDA for the twelve months
  ended 30 June 2024 of £272 million.

In the same statement, REA Group CEO Owen Wilson also lamented Rightmove's seeming unwillingness to engage in a more active dialogue with the Group.

Wilson said:

"We believe that the combination of our world-leading expertise and technology with the attractive Rightmove business will create an enhanced experience for agents, buyers and sellers of property. We live in a world of intensifying competition and this proposed transaction would bring together two highly complementary digital property businesses for investment and growth.

"We have today increased our proposal to an implied value of 770 pence – it provides a combination of immediate value certainty in cash and at the same time gives Rightmove shareholders an increasing opportunity in core digital property and adjacencies where we have much expertise. We are genuinely disappointed at the lack of engagement by Rightmove’s Board and we strongly encourage the Rightmove Board to engage."

Rightmove has yet to comment on the improved offer.