REA Group, owned by media mogul Rupert Murdoch’s News Corp, has announced that it is exploring the possibility of making a takeover offer for U.K. property portal Rightmove. This move is part of the company’s strategy to create a global digital real estate business. Shares of Rightmove surged 25% in early trading after the announcement, while REA Group’s stock fell by as much as 6%. Rightmove, the leading property portal in the U.K., is valued at £4.34 billion ($5.7 billion) as of the most recent market close.
REA Group highlighted the “clear similarities” between the two companies, including strong brand awareness, market share, and aligned cultural values. Despite facing tough competition in the U.K. market in the past, REA Group views the potential acquisition as a “transformational opportunity.” The company operates a number of property websites in Australia, India, and the U.S. and sees the acquisition of Rightmove as a strategic move to expand its global footprint.
The U.K. property market is expected to become more favorable with lower interest rates boosting transactions. However, Rightmove is set to face challenges following the acquisition of rival site OnTheMarket by U.S. property firm CoStar. Jefferies analysts believe that REA Group is undeterred by the increased competition and could provide value to Rightmove through its strong management and expertise in strategic growth areas like mortgages, commercial, and rental services.
Despite limited “cross-border synergies” between the two firms, analysts believe that Rightmove could benefit from REA’s operational excellence and track record of revenue growth in Australia. REA Group has until the end of September to formalize its offer for Rightmove or walk away, according to U.K. takeover laws. The potential acquisition represents a significant opportunity for both companies to create a dominant player in the global digital real estate market.
REA Group’s consideration of a takeover offer for Rightmove underscores the company’s ambitions to expand its digital real estate business globally. The potential acquisition could create a powerhouse in the real estate industry, leveraging the strengths of both companies to drive growth and innovation. Despite the challenges posed by increased competition, REA Group is confident in its ability to add value to Rightmove and capitalize on the growth opportunities in the U.K. and beyond. Stay tuned for updates as the situation develops.