News Corp-backed REA Group mulls potential $8.5b takeover of London-listed Rightmove

Real estate giant REA Group is eyeing to become a global player with a potential $8.5 billion takeover of the UK’s largest online property portal, Rightmove.

The realestate.com.au operator entered a brief trading halt on Monday before confirming it was considering a possible cash and share offer for Rightmove. However, it said it had not approached, nor had any discussions with Rightmove regarding any deal.

REA said the board believed there were clear similarities between the company and Rightmove and saw a “transformational opportunity” to create a global and diversified digital property company, with number one positions in Australia and the UK.

“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 said.

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

Despite the potential appeal to investors, REA shares plunged 5.3 per cent — or $11.56 — to $207.44.

Rightmove was founded in 2000 by four corporate estate agencies and floated on the London Stock Exchange in 2006. Today it has a market capitalisation of £4.4b ($8.5b).

Meanwhile, REA is majority owned by Murdoch family-controlled News Corporation and is worth nearly $29b.

REA in a statement on Monday said it had a long history of growth and demonstrated a track record of building businesses over decades to create globally leading platforms, which have transformed the way people engage with the property sector.

“With an acquisition of Rightmove, REA would look to enhance the UK property experience for buyers, sellers and renters, supporting Rightmove’s vision ‘to give everyone the belief they can make their move’ while positively contributing to the property market ecosystem with investment and innovation,” it said.

REA made the disclosure under the UK’s takeover rules, which also requires the company to announce a firm intention to make an offer for Rightmove, or announce that it does not intend to, by September 30.

REA noted “there can be no certainty that an offer will be made”, with no action needed from shareholders yet.

Rightmove last year booked a revenue of £364.3m, while REA early last month revealed a 23 per cent jump in revenue to $1.45b in fiscal 2024.

But the British company is more profitable at $513.8m, compared with REA’s $461m.

REA is chaired by Hamish McLennan and has spent a lot of time close to the Murdoch family. He is also the chair of listed ARN Media, which recently failed in its takeover bid for Southern Cross Austereo.

Mr McLennan was ousted as chair of Rugby Australia late last year.