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REA, the Australian property platform owned by Rupert Murdoch’s News Corp, has ceased its pursuit of Rightmove, the largest listing website in the UK, following the rejection of its latest £6.2bn bid.
Rightmove’s stock dropped approximately 7 percent on Monday afternoon after REA decided to withdraw, citing the UK company’s minimal response to its preceding offers. Under the UK’s “put up or shut up” regulations, REA was required to submit a final offer by 5 PM or abandon its attempt after Rightmove turned down its latest proposal earlier that morning.
REA noted that its first significant engagement with Rightmove consisted of two meetings over the weekend, despite having made four offers within the last month. All previous communications, according to REA, had been “cursory and procedural.”
“We were disappointed with the limited engagement from Rightmove that hindered our ability to present a firm offer within the available timeline. They had nothing to gain by not engaging with us,” commented Owen Wilson, chief executive of REA.
In a statement, News Corp chief executive Robert Thomson expressed support for REA’s decision to halt its efforts regarding Rightmove. “We commend REA’s financial prudence, as it would be unwise to overpay for an asset, even one with clear positive potential,” he remarked.
The rejection of REA will heighten expectations for Rightmove to demonstrate its capability for business expansion, despite holding a substantial share of the UK listing market.
“Rightmove’s share price has been stagnant without sustained growth for two years, even with its ongoing share buyback program and new strategy in place,” stated REA.
The FTSE 100 property group announced earlier on Monday that it had consulted “the full spectrum of its shareholder base” but ultimately determined that the cash and shares offer presented was “unattractive” and significantly “undervalued Rightmove.”
“We respect REA and acknowledge the success they have achieved in their home market. However, we remain optimistic about the independent future of Rightmove,” asserted Andrew Fisher, Rightmove’s chair.
The recent offer from the Australian entity, which is publicly listed but primarily owned by News Corp, was valued at an implied 781p per share—representing a 41 percent premium over Rightmove’s stock price prior to the revelation of takeover interest this month.
REA had promised to keep a secondary listing on the London Stock Exchange if the acquisition was successful, providing UK investors with straightforward access to the shares.
Rightmove has been making strides into new sectors, including mortgage services and commercial real estate, in search of additional growth.
REA has stated that its expertise could facilitate these efforts. CEO Wilson told the Financial Times last week that his company was “much further advanced and far more successful” in key ancillary business areas.
REA has expressed frustration towards Rightmove concerning its unresponsiveness to previous offers. In response, Rightmove stated that management teams from both companies have had “numerous interactions” over many years, “including discussions around strategy and best practices as recently as June.”
The UK firm asserted that “Rightmove has engaged with every phone call made by REA since the initial public expression of interest” and that its engagement level was “customary and appropriate” for an unsolicited offer.
Additional reporting by Ivan Levingston