SYDNEY, Sept 11 (Askume) – Australian real estate listed company REA Group (REA.AX) said on Wednesday that Britain’s largest property portal Rightmove (RMV.L) had rejected its offer of 5.6 billion pounds ($7.32 billion) in cash and stock .
Rupert Murdoch’s News Corp (NWSA.O) , which owns a 62% stake in REA , did not give a reason why Rightmove rejected the offer.
REA shares fell 1.25% in early trade on Wednesday. Rightmove did not immediately respond to a Askume request for comment outside normal UK business hours.
Jefferies analysts said a deal would allow REA to accelerate growth in a lucrative international market, with the UK property market believed to be three times the size of Australia’s.
REA confirmed the discussions after the Australian company offered to pay a total of 705 pence per Rightmove share, a 27% premium to the British company’s closing price of 556 pence on August 30.
The offer, which comprises 305p in cash and 0.0381 new REA shares, is non-binding and subject to due diligence.
REA said that if the transaction was completed, Rightmove shareholders would own around 18.6% of the combined group.
The cash portion of the deal will be funded through debt and existing cash, REA said.
Analysts estimate that REA would need to issue about 30 million new shares as the equity portion of the deal, which could reduce News Corp’s stake in REA to about 50%.
E&P analyst Antcho Rekowski said: “If it wants to go ahead with the deal, REA’s option now is to make an offer directly to Rightmove shareholders without board approval.”
He said RERA could smoothen the deal by adding a cash component, though that would require raising capital.
Rekowski said: “We see the merits of the deal but do not want to see REA increase the price to a level where the financial indicators are no longer attractive.”
REA said it would seek to apply for a secondary listing in London, regardless of whether the deal would give it access to a wider range of investors.
($1 = 0.7645 British pounds)
