It has been confirmed that OnTheMarket (OTM) has been bought for £100m by £33 billion global property data group CoStar.
In a statement released this morning OTM says: “OnTheMarket seeks to become the number one portal in the UK following an offer from CoStar Group.
“The deal was unanimously recommended by the OnTheMarket Board while CoStar has also received irrevocable undertakings and letters of intent with respect to approximately 29.5% of OnTheMarket shares including OnTheMarket’s six largest shareholders including Spicerhaart.”
Six times more
OTM also says: “CoStar remains committed to OnTheMarket position as ‘the agents’ portal’ with fair and sustainable pricing.”
The new owners plans to spend £46.5 million on sales and marketing in the first full year following the takeover, “as the first stage of a multi-year investment programme totalling hundreds of millions of pounds to drive more consumers to the OnTheMarket portal”.
This is six times what OnTheMarket currently spends and more than three times the current annual media spend of Rightmove, the statement reads.
The offer of 110p per share is ‘substantially’ above its current 70p share price.
Profit down 15%
In its interim results announced today, OTM says revenue increased by 1% with ARPA down by 2%.
Adjusted EBITDA of £3.1m was in line with the previous year, and adjusted operating profit of £1.1m was down 15%.
There was ‘strong growth’ in new homes revenue, up 26% and boosted by increases in both advertiser numbers and ARPA.
Partnering with CoStar Group will significantly accelerate our strategy with the clear target of becoming the market leader”.
Jason Tebb, CEO at OTM says: “From a position of strength, partnering with CoStar Group will significantly accelerate our strategy with the clear target of becoming the market leader, whilst staying committed to fair and sustainable pricing.
“CoStar Group will bring industry-leading global expertise and significant financial firepower to invest
in OnTheMarket, allowing us to accelerate our transformation of the sector.”
Andy Florance, founder and CEO at CoStar Group, says: “We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar Group into the estimated £8 trillion UK residential property market.
“We are excited to combine CoStar Group’s resources and leading marketplace experience with OnTheMarket’s agent-focused culture to create a leading player in the UK marketplace and provide increased choice and higher quality offerings for consumers.”
The sale comes after OTM has gone quiet in recent months following July’s news that, although its financials were solid, fewer agents were listing properties on the portal as a chillier economic climate has swept in.
Its revenue jumped 14% to £34.45 million and adjusted operating profit rose by 59% to £4.3 million. These rises were driven in part by a jump in revenue or ARPA from each of its agent customers of 12% rising from £188 to £210.
At the time the portal said it was struggling to hang on to some of its agent customers with a 2% drop in total agents to 13,086 and a 10% drop in monthly leads per advertiser, although its investment in tech recently have helped keep the overall numbers looking positive and in ‘in line with board expectation’.
The sale to CoStar will worry the senior teams at Zoopla and Rightmove.
CoStar, which has offices in 15 countries, bought Homes.com – a US online property platform – in 2021 and it is expected the OTM purchase will be presented as a continuation of its strategy.