OnTheMarket agrees £99m takeover as it takes fight to Rightmove
- Rightmove shares fell more than 12% after the update by OnTheMarket
- Shares of OnTheMarket rose more than 50% after the deal was announced
OnTheMarket Stocks rose by more than half on Thursday after the group revealed it had agreed to be acquired by US commercial property information group CoStar in a £99m deal.
OnTheMarket shares rose 52.51 per cent or 37.02p to 107.52p on Thursday afternoon, thanks to the 110p per share offer – a 56 per cent premium on Wednesday’s closing price.
But rivalrous Rightmove saw its shares fall by more than 12 percent in response to the deal, following warnings from analysts at Citi who said the move could spell bad news for the British market leader.
Deal: OnTheMarket shares rose on Thursday, while Rightmove shares suffered
Citi analysts said CoStar had firepower, with $450 million to $500 million in free cash flow per year, meaning Rightmove could face greater competition in residential areas and other areas.
CoStar, a heavyweight in the world of commercial property, said it believed the deal represented an “attractive strategic entry point” into the UK residential market. OnTheMarket hopes the deal will ‘accelerate’ its transformation.
The acquisition is backed by 29.5 percent of the group’s share capital, including the six largest shareholders.
CoStar has made a number of acquisitions in recent years, including a $156 million acquisition of housing website Homes.com in 2021.
Jason Tebb, CEO of OnTheMarket, said: “From a position of strength, the partnership with CoStar will significantly accelerate our strategy with the clear goal of becoming a market leader, while continuing our commitment to fair and sustainable pricing.
“CoStar will bring leading global expertise and significant financial firepower to invest in OnTheMarket, helping us accelerate our industry transformation.
“We have strong shared values in our commitment to agents who we believe will benefit from unparalleled value and greater opportunities to improve their operations.”
Chris Bell, chairman of OnTheMarket, said: ‘CoStar’s offer recognizes the quality of OnTheMarket and the significant potential of the company, while offering shareholders an attractive opportunity to realize their investment at a significant premium to the prevailing share price. ‘
Andy Florance, founder and CEO of CoStar, said: ‘We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar into the estimated £8 trillion UK housing market.’
During a turbulent period for the property sector, online estate agency Purplebricks was sold to rival Strike for £1 earlier this year.