Australia’s REA offers to buy UK property listings group Rightmove for £5.5bn

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Australian property listings company REA has made a preliminary offer to acquire the UK’s Rightmove for about £5.5bn, according to people familiar with the matter.

The initial proposal by REA, which is controlled by Rupert Murdoch’s News Corp, values Rightmove in the low 700 pence-per-share range, these people added. The offer was first reported by Bloomberg.

REA has until the end of September to make a formal offer or walk away under UK takeover laws. The company said last week it saw “clear similarities” between the two businesses and was considering making an offer.

Rightmove’s shares ended Tuesday at about 671p in London trading. The shares have risen by about a fifth since news of the potential takeover broke. 

The FTSE 100 group has a market capitalisation of about £5.2bn. 

REA said in its statement last week that it could “apply its globally leading capabilities and expertise” to improve both companies as a diversified group. Analysts have said synergies show little scope given that the two companies operate in different geographies. 

The UK platform has a dominant 80 per cent market share in online property listings but has warned of slowing customer growth. Rival OnTheMarket was acquired last year by US real estate data group CoStar and has since launched an expansion push. 

Rightmove’s chief Johan Svanstrom has looked for growth in areas beyond its core property listings business, including mortgage services and commercial property. 

The activist investor Starboard Value put pressure on News Corp last year to separate its property businesses — including the group’s controlling stake in REA — from the media business.

Starboard has since submitted a non-binding proposal that would end Murdoch family control of News Corp, according to a letter sent to the company’s shareholders.

Representatives for REA and Rightmove declined to comment.