Shares of Rupert Murdoch-backed REA Group (AU:REA) gained almost 5% after the company announced its official withdrawal from the Rightmove PLC (GB:RMV) acquisition. This came in response to Rightmove’s rejection of REA’s fourth proposal made last week. REA Group has now confirmed that it does not plan to make any further offers for Rightmove. Following the announcement, Rightmove shares declined over 8% on Monday.
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REA Group is a digital advertising company that manages Australia’s leading property and real estate websites. It is majorly owned by the U.S.-based media company News Corp. (NWSA). Meanwhile, Rightmove operates the UK’s largest property portal, rightmove.co.uk.
REA Group Ends Rightmove Acquisition Hunt
With four rejected offers, REA Group has finally ended its acquisition chase for Rightmove. The final bid, submitted on September 27, was an offer of 775p per share, reflecting a 17% premium to Rightmove’s closing price on the previous day, along with a special dividend of 6p per share. In total, this represented a 45% premium over Rightmove’s 12-month and 24-month volume-weighted average share prices.
This bid followed an initial offer of 705p per share, valued at £5.6 billion, along with subsequent offers of 749p and 770p, all of which were rejected.
REA Group stated that it follows a careful strategy for mergers and acquisitions, and its bid for Rightmove relied on reaching an agreement at a “fair price.” On the other hand, Rightmove asserted that the offers significantly undervalued the company and its future potential.
Nonetheless, REA strongly believed that its offer would have helped Rightmove shareholders. Although REA is disappointed with the results, it is excited to look into other growth options. With this acquisition, REA Group aimed to build a global and diversified digital property platform, strengthening its leading market positions in Australia and the UK.
Is REA a Good Stock to Buy?
On TipRanks, REA stock has been assigned a Moderate Buy rating based on six Buys, five Holds, and one Sell recommendation. The REA Group share price target is AU$209.72, suggesting that the stock is fully valued at its current levels.
