Australian Property Advertiser REA Mulls Offer for U.K.'s Rightmove — Update

By Stuart Condie

SYDNEY--Australia's REA Group said it is considering a cash-and-share offer for U.K. counterpart Rightmove, citing what it called a transformational opportunity to create a US$25 billion real-estate advertiser.

Acquiring Rightmove would expand REA's global reach just as central banks are cutting interest rates, potentially giving property markets a shot in the arm by lowering borrowing costs. U.K. mortgage rates were already falling before the Bank of England last month cut rates for the first time since 2020.

REA on Monday said that it saw a significant opportunity to create shareholder value by combining the two advertisers, highlighting the potential for strong margins, significant cash generation, and shareholder returns. It didn't give any financial details.

Rightmove has a market capitalization of 4.39 billion pounds, equivalent to $5.76 billion, according to FactSet. That makes it about a quarter of the size of REA, which already has global interests through a 20% stake in U.S. group Move and wholly owned subsidiary REA India.

"REA sees a transformational opportunity to apply its globally leading capabilities and expertise to enhance customer and consumer value across the combined portfolio," REA said in a market filing.

REA said it had yet to speak with U.K.-listed Rightmove over any offer and that it wasn't certain of making an offer within the 28-day deadline specified by the U.K.'s takeover code.

Australia's largest property advertiser by share and market capitalization, REA last month reported an annual net profit of 460.5 million Australian dollars, equivalent to US$311.5 million, up 24% on a year earlier.

REA and local rival Domain both flagged likely tailwinds in 2025 from local interest rate cuts, but the Reserve Bank of Australia was still considering raising the cash rate in recent months due to stubbornly high inflation. Some economists don't anticipate lower local interest rates until late in 2025.

REA shares traded ex-dividend and were about 7% lower after the company announced its interest in Rightmove. The stock is still up 13% in 2024 and has more than doubled in value since mid 2022.

REA is 61% owned by News Corp., which owns Dow Jones & Co., the publisher of this newswire and The Wall Street Journal.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

September 01, 2024 21:56 ET (01:56 GMT)

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