Rightmove rejects THIRD bid for Murdoch: analysts warn ‘frustrated’ Australians could turn hostile
The battle for Rightmove is becoming increasingly venomous after the property website rejected a third takeover bid from a rival backed by Rupert Murdoch.
The FTSE 100 company called the 770p-per-share offer from Australia’s Rea Group, which values the site at £6.1 billion, “unattractive” and said it “significantly undervalues” the business.
The rejection prompted a furious response from Rea, which is 61 percent owned by Murdoch’s News Corp.
The Melbourne-based company criticised Rightmove’s board and urged the UK company’s shareholders to put pressure on the directors to enter into discussions with them.
Takeover bid: Australian property website Rea, which is 61% owned by media magnate Rupert Murdoch’s (pictured) News Corp, has rejected a third bid for Rightmove
Owen Wilson, CEO of Rea, said it was “extremely disappointing” that Rightmove would not intervene.
Rightmove rejected three bids from Rea, with the first two valuing the offer at £5.6bn and £5.9bn.
Analysts say Rea could attempt a hostile takeover, which involves bypassing the board of directors and negotiating directly with shareholders in an attempt to gain control.
According to The Mail, the Australian company would rather reach a deal than pursue a hostile takeover.
Rightmove responded to Rea’s latest bid: ‘The increased offer remains unattractive and significantly undervalues the business and its future prospects.’
The battle for Rightmove comes as the UK housing market shows signs of recovery after a period of weak demand caused by high mortgage costs.
The recovery is expected to boost Rightmove’s shares and profits. Rea said it was “disappointed by the latest rejection” and frustrated that there had been “no substantial engagement with Rightmove”.
“I was very confident that we would be in discussions with them at this point,” Wilson told the Financial Times.
The company has held talks with Rightmove’s major shareholders to bring the bosses to the table.
“Rea urges Rightmove shareholders to encourage the Rightmove board to engage in constructive discussions with Rea to work towards a recommended transaction,” the Australian company said.
Analysts at Jefferies said Rea’s appeal to investors could be “a last-ditch effort” to get Rightmove to do business with them before the September 30 deadline under the City Code for takeovers and mergers.
Russ Mould, investment director at AJ Bell, said: ‘Rea appears to be losing patience with Rightmove after the company rejected a third takeover proposal, adding to his voice that it is not fair not to engage with the company in a proper manner.’
He added: ‘This sets the tone for Rea taking an adversarial approach, bypassing the board and negotiating directly with shareholders. Rightmove’s largest investors are asset managers and they will all have a price at which they would be happy to sell their shares.
‘They hold Rightmove shares to make money and it is clear that Rea still wants to keep the business.’
Analysts at Panmure Liberum said Rea’s “tougher language” indicates “the company is likely to choose to approach shareholders at this stage rather than Rightmove’s board, if it has not already done so”.
But the analysts added: “We do not think this will change much and remain convinced that no agreement is likely to be reached.”
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