Rightmove has issued a new statement regarding a further increased possible offer for its business.
The company confirms that as previously announced, the Board of Rightmove received a third unsolicited, non-binding and highly conditional proposal from REA Group Ltd regarding a possible cash and share offer to acquire the entire issued and to be issued ordinary share capital of Rightmove on 22 September 2024.
The increased proposal was 341 pence in cash and 0.0422 new REA shares for each Rightmove ordinary share. Based on the closing price of REA on 24 September 20241, this revised proposal implied an offer value of 759 pence.
Rightmove points out that from 30 August 2024 (the last business day before the offer period) to 24 September 2024, REA’s share price has fallen by c.12%.
Rightmove says its Board considered the increased proposal, together with its financial advisers, and concluded that the increased proposal continues to be “unattractive and materially undervalues the company and its future prospects”.
The statement adds:
“Accordingly, the Board unanimously rejected the increased proposal on 24 September 2024. Rightmove shareholders should take no action in respect of the increased proposal.
“This announcement is being made without the agreement or approval of REA. There can be no certainty that any offer will be made nor as to the terms on which any offer may be made.
“Any offer for Rightmove is governed by the City Code on Takeovers and Mergers (the “Code”). Under Rule 2.6(a) of the Code, REA must, by not later than 5.00 p.m. on 30 September 2024, either announce a firm intention to make an offer for Rightmove in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.
“This deadline can be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code. A further update will be provided as and when appropriate.”
Following Rightmove’s decision to reject a third bid from Rupert Murdoch’s REA Group, there are growing reports that Australian firm could now launch a hostile takeover in a bid to seal the deal for the UK-based company.
REA expressed “disappointment” at the rejection of its third offer, said it is “frustrated” at the lack of substantive engagement, and reiterated that it believes that the latest is a “highly compelling proposition” for Rightmove shareholders, and at a significant premium to peers.
In its statement yesterday, REA appealed directly to shareholders to engage with the Rightmove board. “We think this might be a last throw of the dice by REA,” said analyst Giles Thorne at Jefferies. But others expect REA to go hostile.
Panmure Liberum’s Sean Kealy said the rejection was “not a huge surprise” as the third offer was an improvement of just 21p over the second offer and given the move in REA’s shares, is now worth just 759p a share.
“The ball is now back in REA’s court, and we expect that the next step in this process will be for REA to take a more hostile approach – if it isn’t already directly approaching shareholders,” said Kealy. “We continue to believe the offer will have to substantially improve from here for a successful deal to take place – and that REA Group, in the absence of any creative solutions from the Murdochs, will struggle to table a significantly improved offer.”
Russ Mould at AJ Bell said yesterday’s statement from the Aussie company “sets the tone for REA taking a hostile approach, bypassing the board and negotiating directly with shareholders”.
Looking at Rightmove’s major shareholders list shows these are led by institutions: Kayne Anderson Rudnick Investment Management (10.8%), Lindsell Train (7%), Generation Investment Management (5.7%), BlackRock Investment Management (4.3%), Baillie Gifford (4%), Vanguard (3.8%).
