Rightmove share price flies high after takeover attempt
But leading commentator wonders whether agents will pay a high price for REA Group's failed attempt to buy the portal.
The attempted acquisition of Rightmove by Australian counterpart the REA Group has been a boon for the UK portal’s shareholders as a recent hike in the firm’s share price appears to have stuck.
Trading at approximately £5.70p per share prior to the REA Group intervention, it initially jumped to £7.08 but has settled back at £6.25p, still 10% more than a few weeks ago.
This confirms the view of City investment banking giant Panmure Liberum, which yesterday said OnTheMarket’s attempts to compete expensively with Rightmove had led to a reduction in Rightmove’s share price last October that did not reflect the portal’s real worth.
But this view is not held by industry commentator Russell Quirk, who says CoStar’s recent purchase of OnTheMarket means the ‘third’ portal could “easily nibble at its heels” and that Rightmove’s statement yesterday that it had a “clear strategy for long-term growth” is optimistic.
The portal also said it was, “well positioned to drive innovation and digitisation through the entire property transaction chain, powered by unrivalled market data and insights,” but this would mean a significant departure from its traditional role as an advertising portal for agents.
“This is why Rightmove shareholders have looked the REA Group gift horse in the mouth – they believe estate agents can be squeezed for even more money,” he says. “From previous announcements, this is likely to mean a rise in average spend by agents from £1,300 a month to £2,000.
“I don’t think agents are going to tolerate a 50% rise in their portal costs like that and Rightmove will lose agents at scale, in my opinion – and guess who will be waiting to take them on instead? Yes, Zoopla and OnTheMarket.”
