Rightmove rejects third takeover offer from REA
UK property platform Rightmove has once again rejected a takeover offer from REA Group, saying the Australian outfit's latest proposal “materially undervalues" the company.
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REA’s latest cash-and-shares offer, its third, was equivalent to an offer price of 759p based on REA's closing price on Tuesday, equal to around £5.9bn.
This is a 37% premium to Rightmove’s share price on 30 August, the day before the first offer.
However, as Rightmove pointed out in a statement on Wednesday, since that time REA’s own share price has dropped by 12%, essentially bringing the offer price down.
"The board considered the increased proposal, together with its financial advisers, and concluded that the increased proposal continues to be unattractive and materially undervalues the company and its future prospects," Rightmove said.
"Accordingly, the board unanimously rejected the increased proposal on 24 September 2024," the company said, adding that shareholders should not to take any action in respect of the latest offer.
In a statement on Wednesday, REA said it was "disappointed" and "frustrated" by Rightmove's continued refusal to engage in conversations.
"REA continues to firmly believe that the further improved proposal represents a highly compelling proposition for Rightmove's shareholders at a significant premium to relevant trading metrics, providing a combination of immediate value certainty in cash and at the same time giving Rightmove shareholders the opportunity to benefit from the future value creation of the combined business," the Australian firm said.
Following last Friday's offer, AJ Bell investment director Russ Mould said REA's offer clearly wasn't generous enough, and that shareholders are "more likely to sit up and show interest if the bid starts with an eight, not a seven".
Mould said: "Pouncing on the business after a lacklustre period for the share price, there was always the chance REA was simply trying its luck while the target was going through a tough period. That no longer appears to be the case. This looks like a serious pursuit, albeit one where the bidder’s idea of fair value still doesn’t align with shareholders’ expectations."