Oz portal giant confirms plan to buy £4.4 billion Rightmove

Australian property portal firm REA has confirmed that it is to consider making a bid to buy Rightmove.

In a statement to the London Stock Exchange, the company says it is thinking about a cash and share offer for the UK’s No. 1 portal but that it has not had any discussions with Rightmove or made a formal move. Its CEO is Owen Wilson (pictured)

“There can be no certainty that an offer will be made, nor as to the terms on which any offer may be made,” it says.

REA Group, which operates the largest portal in Oz says it believes there are clear similarities between REA and Rightmove in terms of 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.

“REA sees a transformational opportunity to apply its globally leading capabilities and expertise to enhance customer and consumer value across the combined portfolio and to create a global and diversified digital property company, with number 1 positions in Australia and the UK,” it says.

But a purchase of Rightmove would be very expensive for REA. Rightmove’s official market capital valuation is currently £4.4 billion, so any offer would need to be substantially more than this to persuade shareholders to sign off a takeover.

Investment opportunity

“The REA Board believes the enlarged group would represent a highly attractive investment opportunity for both REA and Rightmove shareholders, combining robust growth with strong margins and significant cash generation, enabling continued capital appreciation and shareholder returns.

“REA therefore considers that a combination of the two businesses would provide a significant opportunity to unlock shareholder value.”

Under City takeover rules, REA has until the end of this month to either announce an offer for Rightmove.

This is not the first time REA has attempted to get involved in the UK’s property market. During the mid-noughties it bought Nick Leeming’s PropertyFinder portal but after a brief, unsuccessful and expensive battle with Rightmove, sold it to News International, which soon afterwards sold it on to Zoopla.

REA Group’s turreported a turnover last year of £700 million and a profit of £425 million while Rightmove’s revenue was £364 million and a profit of £258 million.