REA Group, which is owned by News Corp and runs Australia’s biggest real estate website, said on Monday that it is thinking about making an offer to buy Rightmove, which is the biggest online real estate agent in Britain. This news caused the share price of the London-listed company to go through the roof.
In order to make a “global and diversified digital property company,” the Melbourne company that runs the real estate website Realestate.com.au said it is thinking about making an offer of cash and shares to buy its FTSE-100 competitor.
Before the news that REA Group might be interested, Rightmove had a market value of about £4.4 billion ($5.8 billion) at the end of the trading day on Friday.
For now, REA Group, which was founded in 1995 in Melbourne and is worth AU$ 27.4 billion ($18.6 billion), has not yet reached out to Rightmove or started talks with the U.K. business. The Australian company has until the end of September to make an official offer. It has grown quickly over the last few decades by buying other companies.
Rightsmove Plc RMV 21.42% shares, which are traded on the London Stock Exchange, went up 21% on Monday. They had dropped 1% of their value over the past year. The Sydney-listed shares of REA Group (REA -5.28%) were down 5% on Monday, after going up 29% in the past year.
Countrywide, Connells, Halifax, and Royal and Sun Alliance, the top four real estate agents in the U.K., started Rightmove as a joint business in 2000. In March 2006, the company went public on the London Stock Exchange.
Following this, the U.K. company’s share price went through the roof thanks to a housing boom. It reached an all-time high on December 31, 2021, but then dropped by about 30% after the COVID-19 pandemic.
Peel Hunt analysts, led by Jessica Pok, said that Rightmove was now “one of the cheapest classifieds businesses in Europe” because its share price had dropped. They also said that the company’s rating had been “subdued for some time due to the negative sentiment on the U.K. housing market.”
Russ Mould, an investment expert at AJ Bell, said that the new Labour government’s policies that support building homes could help Rightmove’s profits even more. He also said that REA Group’s offer could drive away other potential buyers and start a bidding war.
News Corp NWSA 1.72% had its first deal with REA Group in 2001. Rupert Murdoch’s media company paid AU$ 2 million ($1.4 million) in cash and another AU$ 8 million in print and TV ads for a 44% stake in the online real estate agent.
After that, Murdoch’s media company increased its interest in the quickly growing listings business. According to FactSet data, it now has a 61.42% stake in REA Group, making it by far the biggest shareholder in the company.
