Rightmove PLC (GB:RMV) has turned down the initial acquisition offer of £5.6 billion from Rupert Murdoch-owned REA Group (AU:REA). REA Group did not provide a reason for the rejection of the offer. Following the news yesterday, Rightmove shares gained 1.27%. RMV stock has grown by over 20% since the news of the potential acquisition. Meanwhile, REA Group lost over 2% in today’s trading session.
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Both REA Group and Rightmove hold dominant positions in their respective core residential markets. REA Group, primarily owned by U.S.-based News Corp. (NWSA), benefits from the media giant’s strong backing. Meanwhile, Rightmove operates the UK’s largest property portal, rightmove.co.uk.
REA Group Targets Rightmove for Expansion
Last week, REA Group announced that it is considering a potential offer but has not yet initiated any discussions with Rightmove about the proposal. Yesterday, it made a cash and stock offer of 705p per Rightmove share, representing a 27% increase compared to Rightmove’s closing price of 556p on August 30. With this acquisition, REA Group aims to establish a global, diversified digital property platform, securing leading market positions in Australia and the UK.
Under REA Group’s proposed offer, Rightmove shareholders would hold 18.6% of the merged entity. The company also plans to pursue a secondary listing on the London Stock Exchange to enable UK investors to trade the shares.
However, with this rejection, REA Group must enhance its offer to win Rightmove’s acceptance. According to the UK takeover laws, REA has time until the end of September to either submit a formal offer or withdraw from the deal.
Is REA a Good Buy?
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$209.60 is 6.18% above the current trading price.
