Shares of the ASX-listed REA Group (AU:REA) declined over 5% following the news of a potential acquisition of UK-based Rightmove PLC (GB:RMV). REA Group stated that it is exploring a possible cash and stock offer. However, it has not yet approached Rightmove for any discussions regarding a bid. The UK-listed shares of Rightmove surged nearly 22% as of writing.
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REA Group operates a property platform that facilitates the buying, selling, and leasing of properties. The company is majorly owned by the U.S.-based media house News Corp. (NWSA). Meanwhile, Rightmove offers services through the UK’s largest online property portal, rightmove.co.uk.
Why Is REA Group Eyeing Rightmove?
REA Group identifies strong similarities with Rightmove, particularly their dominant positions in the core residential market. With this deal, the company aims to create a global, diversified digital property platform with market-leading positions in Australia and the UK. REA Group also highlighted a significant opportunity to leverage its expertise to increase the customer base across both portfolios.
Regarding shareholder returns, REA believes the acquisition would blend strong growth with high margins and substantial cash flow. This would likely lead to enhanced capital value and better returns for shareholders.
The company stated that there is no guarantee that an offer will be made. According to the UK takeover regulations, REA Group must decide whether to submit a formal bid for Rightmove or withdraw by September 30.
What Is the Forecast for REA Stock?
On TipRanks, REA stock has been assigned a Moderate Buy rating based on six Buys, four Holds, and one Sell recommendation. The REA Group share price target of AU$207.51 indicates that the stock is fully priced at the current levels.
