Rightmove Rejects Fourth Takeover Bid from REA Group Ahead of Today's "Put Up or Shut Up" Deadline

Rightmove has once again "unanimously" rejected a takeover bid from Australia's REA Group, its fourth this month, reaffirming that the implied offer price of 775 pence per share (valuing Rightmove at £6.2 billion) remains unattractive to shareholders and continues to undervalue the British portal.

Rightmove has already released a statement to the London Stock Exchange this morning, saying:

The Board of Rightmove has fully reviewed the Latest Proposal with its financial and legal advisers. The Board has taken into consideration the views of its shareholders and also considered the representations from the Chair and management team of REA, as detailed below.

The Board has concluded that the Latest Proposal remains unattractive and continues to materially undervalue Rightmove and its future prospects and that the Board cannot recommend the Latest Proposal toRightmove shareholders.

Interestingly, Rightmove has also defended its communications strategy with REA Group throughout this bidding process—something REA Group lamented in its comments when the third bid for Rightmove was submitted and promptly rejected:

The Rightmove and REA teams have known one another for many years, and have had numerous interactions, including discussions around strategy and best practice as recently as June. Rightmove has taken every phone call that REA has made since its interest was first made public, with a level of engagement which inRightmove's view is customary and appropriate in the context of an unsolicited and unilateral series of approaches, made to a UK listed company, where the possible offeror is taking an incremental and iterative approach to price discovery.

Following the receipt of the Latest Proposal, Rightmove's Chair, Andrew Fisher, agreed to meet withHamish McLennan, the Chair of REA. The purpose of this in-person meeting was to allow the Chair of REA an opportunity to present the Latest Proposal and engage in discussions with the Chair of Rightmove, ensuring that the Rightmove Board was fully appraised of all information of relevance to its ongoing deliberations.

In addition, at REA's request, there was a further meeting including members of the executive teams of both companies. No information was presented in either meeting which was materially new or different to the information which has been previously presented publicly by REA. Furthermore, nothing was presented in either meeting which materially changed the Board's view of the Latest Proposal. In addition, the meetings confirmed Rightmove's confidence in its current strategy and execution within a UK context.

During these discussions REA requested an extension to the Put Up or Shut Up deadline and access to due diligence information, to allow it to consider a potential fifth proposal.

The Board considers that the considerable information onRightmove's business, strategy and financial results in the public domain, existing knowledge of Rightmove within REA, and Rightmove's numerous engagements with REA, should be sufficient for REA to put forward a proposal capable of recommendation, within the 28-day period set out under the UK Takeover Code.

The Put Up or Shut Up framework is designed to protect offeree companies from being subjected to an unnecessarily prolonged period of uncertainty cause by an offer period.

The Board has declined requests from REA to grant due diligence access as none of REA's proposals received to date has been at a sufficient level to grant such access. Without a compelling proposal, it would not be appropriate or in the best interests ofRightmove or its shareholders to provide confidential and commercially sensitive information to REA.

Andrew Fisher, Chair at Rightmove, said:

"We respect REA and the success they have achieved in their domestic market. However, we remain confident in the standalone future of Rightmove. Rightmove has been the leading operator in the UK for over 20 years, and it has differentiated market presence, branding and technology, and very significant opportunities for future growth.

"The last few weeks have been very disruptive, as well as unsettling for our colleagues. To the extent REA wants to put forward a further proposal, I urge them to submit a best and final proposal ahead of today's 5pm 'PUSU' deadline such that we can bring certainty to this process.

"Our world-class team is executing against our strategic plan, and continuing to drive innovation and accelerate growth to deliver compelling shareholder value."

With time running out for REA Group to submit an attractive bid for Rightmove, a bumper offer would theoretically need to be made before today's nominal deadline, however, REA Group retains the right to make an on-market bid at any time.

Assuming REA Group (Rupert Murdoch) is serious about acquiring Rightmove at the best possible price, the big question is, at what point does this ongoing friendly takeover become hostile?

Rightmove and REA in context

Rightmove is one of the biggest names in global real estate and one of the most powerful and successful real estate portals of all time.

It is highly profitable, nigh on untouchable by its rivals (Zoopla and OnTheMarket), and appears to get stronger yearly.

Fittingly, you could swap the names Rightmove and REA and get a similar story.

REA is another example of a hyper-successful, publicly listed giant that holds an unassailable market leadership position in its native Australia.

The only significant differences in the profile of the two companies are that A) REA has market leadership positions in other countries besides Australia and B) REA operates in a market where sellers pay to market their properties, meaning the source of each respective company's revenue fits a slightly different profile.

Rightmove and REA both sit comfortably in the "VIP lounge" of real estate giants worldwide, alongside Zillow and CoStar in the United States, Cian in Russia, Beike in Chaina, Hemnet in Sweden and ImmoScout24 in Germany.

Combining the two would create the most powerful global real estate company in the world across many metrics including profitability, market share across multiple continents, potential shareholder value and, more importantly, buying power.

In layman's terms, a successful takeover is unprecedented, an industry-shifting move that would probably start a chain reaction of mergers and acquisitions as powerful entities like the would-be newly-formed "REA-Move" and the American CoStar Group hoover up available real estate marketplaces around the world one by one.