Rupert Murdoch's REA Group mulls bid for U.K. property listing giant Rightmove

By Louis Goss

REA Group, the News Corp controlled company that owns Australia's largest property listings website, on Monday confirmed it is considering making an offer to buy Britain's top online real estate agent Rightmove, in news that caused a surge in the London-listed company's share price.

The Melbourne firm, which runs property listings website Realestate.com.au, confirmed it is weighing up plans to make a cash and shares offer to acquire its FTSE-100 rival, in a bid to create a "global and diversified digital property company."

At close on Friday, prior to news of REA Group's possible interest, Rightmove had a market capitalization of around GBP4.4 billion ($5.8 billion).

REA Group, which was started in Melbourne in 1995, and which has a market capitalization of AU$ 27.4 billion ($18.6 billion), said it is still yet to approach Rightmove or enter negotiations with the U.K. company. The Australian firm, which has grown rapidly in recent decades through a series of acquisitions, has until the end of September to make a formal offer.

Shares in Rightmove Plc (UK:RMV), listed on the London Stock Exchange, were up 21% on Monday, having lost 1% of their value over the previous 12 months. REA Group's (AU:REA) Sydney listed shares were down 5% in Monday's trading session having gained 29% over the past 12 months.

Rightmove was first started in 2000 as a joint venture between the U.K.'s top four real estate agents -Countrywide, Connells, Halifax and Royal and Sun Alliance - before it was floated on the London Stock Exchange in March 2006.

The U.K. company's share price subsequently surged on the back of a boom in Britain's property market before hitting all time highs on Dec. 31 2021 and later slumping by around 30% in the aftermath of the COVID-19 pandemic.

Peel Hunt analysts, led by Jessica Pok, said the slump in Rightmove's share price had made it "one of the cheapest classifieds businesses in Europe" as they noted the company's rating has been "subdued for some time due to the negative sentiment on the U.K. housing market."

AJ Bell investment analyst Russ Mould said Rightmove's earnings could be boosted even further by the new Labour government's pro-housebuilding policies, as he noted REA Group's offer could flush out other interested parties and spark a bidding war.

News Corp (NWSA) first got involved in REA Group in 2001, when the media company owned by Rupert Murdoch purchased a 44% stake in the online real estate agent for AU$ 2 million ($1.4 million) in cash and a further AU$ 8 million worth of print and TV advertising.

Murdoch's media company later upped its stake in the fast-growing listings business and currently owns 61.42% stake in REA Group, making it by far the company's largest shareholder, according to FactSet data.

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Over the past two decades, REA Group has subsequently acquired stakes in an array of the world's top online estate agents, including Italy's Casa.it, Britain's Zoopla, and America's Move Inc, which runs the U.S.'s second most visited property listings website Realtor.com.

Any acquisition of Rightmove would comes as another major blow to the London Stock Exchange, which has already suffered from a series of high-profile exits in recent years.

-Louis Goss

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09-02-24 0520ET

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