realestate.com.au's parent eyeing UK move

RUPERT Murdoch’s real estate company REA Group is considering a global future, with the group confirming it is considering a $9 billion takeover offer for UK-based property platform rea.

Following a brief denial of the possible transaction, REA announced it was “considering a possible cash and share offer for the entire issued and to-be-issued share capital of Rightmove.”

The REA board said in their statement that there were similarities between the two groups, including “their leading market positions in the core residential business, continued expansion and innovation of offerings across adjacent segments, leading audience share and strong brand awareness, as well as highly aligned cultural values.”

The News Corp-controlled REA said the possible move could mark a “transformational opportunity” to utilise its capabilities and expertise to improve customer and consumer value across a combined portfolio, while also establishing a “global and diversified digital property company, with number 1 positions in Australia and the UK.”

The London Stock Exchange-listed Rightmove has a market value of $8.5 billion and posted revenue of $706 million last year, while returning a $512.8 million profit.

While REA Group reported a 24% year-on-year jump in revenue in the March quarter, underpinned by growing listings across the residential and commercial sectors in Australia.

The potential acquisition comes after US real estate information website CoStar took off globally into Canada, the UK, Spain and France, including the purchase of residential listings platform OnTheMarket.

“It does not come as a surprise to us today that Rightmove has become an acquisition target, given the rating has been subdued for some time due to the negative sentiment on the UK housing market and concerns over competitive threats from CoStar/OnTheMarket,” said Jessica Pok, analyst at Peel Hunt.

Roy van Keulen, analyst from Morningstar, also believes this could be a defensive move from REA concerning the international expansions of CoStar.

“If they see CoStar, who’s already the leader in commercial real estate listings and data, if they become a globally relevant player in residential – that’s a long-term issue for REA,” said van Keulen.

Investors look cautious about the potential downsides of the deal with REA Group shares falling 5.28% immediately following the announcement.

While at the same time, Rightmove share have seen a 25% (696p) bump to their highest rate since March 2022.

REA has advised shareholders not take any action at this time.