- Latest offer pitched at 780p
- Marks REA’s fourth attempt
- Deadline expires at 5pm today
Housing portal Rightmove (RMV) offered a firm rebuttal to the fourth – and as it stands final – takeover offer from Australian group REA Group (REA:ASX) saying it still ‘materially undervalued’ the business and its future prospects.
Rightmove shares dipped 52p or 8% to 616p against REA’s offer of more than 780p in cash and stock.
OFFER LABELLED ‘UNATTRACTIVE’
Under the terms of REA’s latest offer, Rightmove shareholders would receive 346p in cash and 0.0417 new REA shares, implying a value of 780p based on the closing price of REA Group on the Australian market, as well as 6p per share in cash in lieu of a final dividend for 2024.
The board unanimously rejected the proposal as ‘unattractive’ but was at pains to point at that contrary to REA’s claims it had engaged with the Murdoch-backed group at every stage of the process.
‘The Rightmove and REA teams have known one another for many years, and have had numerous interactions, including discussions around strategy and best practice as recently as June. Rightmove has taken every phone call REA has made since its interest was first made public, with a level of engagement which in Rightmove's view is customary and appropriate in the context of an unsolicited and unilateral series of approaches, made to a UK listed company, where the possible offeror is taking an incremental and iterative approach to price discovery.’
Given the latest offer contains no substantive new information, the board has declined requests for due diligence access and a request to extend the deadline for talks beyond today’s 5pm cut-off as neither is in the interests of shareholders.
Our sense is, regardless of price, Rightmove’s major stakeholders are just not interested in a deal involving shares, in much the same way as institutions voted down the proposed merger between Abrdn Property Income (API) and Custodian Property Income REIT (CREI) in favour of a managed wind-down and cash distribution.
MARKET CONFIDENCE GROWING
Rightmove argues it is well-positioned to reach its medium-term goals as a standalone business, and now is not the time to be selling up given the health of the UK property market.
To the company’s point, the latest Nationwide survey showed average UK house prices rose by 3.2% in September compared with a year ago as the pressure on household budgets eases and mortgage rates come down.
The Bank of England is widely expected to cut interest rates by another 0.25% in November, triggering a further lowering of mortgage rates by the big lenders.
The number of mortgage approvals rose again in August to reach their highest level since before the disastrous ‘mini-budget’ in September 2022, with net borrowing by individuals rising to £2.9 billion last month compared with £2.8 billion in July.
