REA Group Ltd., part of Rupert Murdoch’s News Corp., is contemplating a $5.8 billion bid for the UK property portal Rightmove Plc, aiming to create a global digital real estate powerhouse. The Australian property listing leader, which already operates in markets including India, has announced that it is considering a possible cash and share offer for Rightmove, though no formal approach or discussions have yet taken place.
The news led to a significant drop in REA’s shares, which fell as much as 8% in Sydney, marking the largest intraday decline since December 2022. This decline reflects investor concerns that REA might need to issue new stock to finance the acquisition. Rightmove’s shares have also experienced a 3.5% dip this year, valuing the company at approximately £4.38 billion ($5.8 billion).
A successful acquisition would considerably enhance REA’s scale, already a leading player in the Australian online real estate market. Rightmove has consistently achieved steady revenue growth, and the UK housing market is poised for a rebound with expected declines in interest rates.
Under UK takeover regulations, REA must confirm whether it will proceed with a formal bid by September 30 at 5 p.m. London time. The potential merger is seen as a strategic move to leverage economies of scale in the digital property-broking sector. REA’s statement highlighted that the combined entity could unlock significant shareholder value and provide robust growth opportunities, supported by strong margins and substantial cash flow.
Despite its strong market position, REA’s plan could involve raising at least A$6.1 billion—around 23% of its current market capitalization—to fund the deal. Analysts from Bloomberg Intelligence have noted that while REA’s valuation supports such an equity raise, there are risks associated with the execution of the deal and the potential impact on shareholder returns.
REA’s interest in Rightmove underscores the importance of scale in the digital property sector, with REA’s market value standing at A$27 billion ($18 billion), significantly higher than local competitor Domain Holdings Australia Ltd. However, past experiences with large-scale overseas acquisitions by Australian companies have raised investor concerns about realizing substantial benefits from such deals.
