Investment activist Brett Stone urges OnTheMarket shareholders to reject CoStar deal

Investment activist Brett Stone on Thursday urged OnTheMarket shareholders to reject a £99m takeover by US commercial real estate information group CoStar, arguing the deal is "opportunistic" and "significantly" undervalues the company.

In an open letter to shareholders, Stone said that CoStar is an "unsuitable" buyer with a questionable" reputation and that the deal is not in the UK’s national interest.

He also argued that the takeover is likely to result in "significantly higher" total portal costs for UK estate agents, more than 10,000 of which are small businesses.

Stone said the offer significantly undervalues OnTheMarket, being 33% below the IPO issue price of 165p, and only at a 2.9x multiple.

"Jason Tebb and OnTheMarket’s board are cashing in to make a quick buck - they are not looking out for shareholders," he said.

"No deal is better than a bad deal, ending estate agent's ownership in the agents' portal is not the right answer to solve OnTheMarket's problems," it said.

Brett also pointed out that CoStar would become one of two foreign "gatekeepers" to the UK property commerce category, along with Zoopla, owned by Silver Lake, Canadian PSP Investment, and Singaporean wealth fund GIC.

Brett Stone is the managing partner of private investment partnership Edengen.

OnTheMarket announced last month that it had agreed to the deal, which will see shareholders receive 110p per share in cash.