Rupert Murdoch launches fourth Rightmove bid worth £6.2 billion

An Australian property giant owned by Rupert Murdoch was last night told it must offer at least £7 billion before Rightmove has a chance of securing a deal.

It came after Rea Group made a fourth bid for the British housing giant, valuing the company at £6.2 billion.

Rightmove said yesterday it will consider the latest proposal, having rejected three previous bids worth £5.6 billion, £5.9 billion and £6.1 billion.

And property website group FTSE 100 has not granted Rea’s request to extend the bidding deadline from 5pm on Monday.

Shares in Rightmove rose 0.5 per cent, or 3.6p, to 668.6p yesterday, still below the offer price of 781p, a sign that investors do not believe a deal will be reached.

Rea said he was ‘disappointed’ that Rightmove’s board, led by chairman Andrew Fisher, was not yet engaged in takeover talks. The Melbourne-based group’s chief executive Owen Wilson flew to London yesterday in the hope of meeting Rightmove directors. He joined Rea chairman Hamish McLennan, who dropped by to meet Rightmove shareholders earlier this week. They will hold further talks with Rightmove shareholders this weekend, urging them to put pressure on the company’s board to get involved.

“Rea has repeatedly requested meetings with Rightmove but no meetings have taken place and as such there has been no substantive involvement apart from cursory procedural telephone conversations with the chairman of Rightmove,” a spokesperson for Rea said.

Several investors, including Axa, have broken cover to say Rightmove directors must come to the table. But others said the real estate platform needed to hold its nerve.

“Rightmove’s board should be in no hurry, if at all, to engage with Rea on the basis of his slightly tightened offer,” said a spokesman for Sanford DeLand Asset Management, which has a £16 million stake in the company has, against the Mail.

‘We do not share Rea’s logic that a combination will realize value as there are no existing operations in Britain.’

He said there was “zero appeal” to “exchange 100 percent of what is a great British organic growth story for part cash and part paper in Rea, raised largely through mergers and acquisitions.”

“It would take nothing less than a knockout bid with an all-cash alternative to change our view,” he added.

Peel Hunt analysts Jessica Pok and Melanie Yang said the new offer was “not strong enough” and questioned Rea’s ability to further increase its offer.

They said Rightmove is worth at least £7 billion.

“If Rightmove agrees to extend the deadline for a formal bid, this opens the possibility for Rea to increase its bid,” they said.

“However, we do not believe that Rea can significantly increase the offer price.”

Dan Coatsworth, investment analyst at AJ Bell, said: ‘Rea doesn’t seem to get the message. To actually get this deal done, Rea needs to consider a cash offer. Shareholders know they have a unique asset in the UK stock market and the UK market leader in property portals. They won’t give that up unless Rea pays a higher price.’

He suggested Rea would have to pay more than 800 cents per share, adding: “It has to dig much deeper or walk away.”

Rea offered 781p per Rightmove share, including a special dividend of 6p. It has committed to a secondary listing in London, allowing UK investors to own Rightmove shares.