Investors urge Rightmove to start takeover talks

A number of Rightmove shareholders have said that the property website should start takeover talks with an Australian rival.
Rightmove has rejected three indicative offers from REA Group as opportunistic, unattractive and undervaluing the company’s prospects.
Jamie Forbes-Wilson, a fund manager at Axa Investment Managers, which holds around 1 per cent of Rightmove, said: “We would agree that it feels a little opportunistic for REA to be coming along at this time, but it is also recognition that REA sees Rightmove as the high-quality business that we, as long-term holders of the share, think that it is.”
He said that the Australian suitor’s latest indicative offer was “more reflective of the true value of the business and a level at which the Rightmove board should engage”.
GCQ Funds Management, an Australian fund manager which has shares in the Rightmove, said that the offer was around that price that the board should engage with REA. It is unclear how some of Rightmove’s biggest shareholders, such as Lindsell Train, with 7 per cent, and Baillie Gifford, with 4 per cent, view the deal.
The latest cash-and-shares offer values Rightmove at about £6 billion, or 771p a share. Shares in Rightmove, which stood at about 550p at the end of August before REA’s interest was revealed, were down by 7½p, or 1.1 per cent, at 665p at the close.
The shares have been under pressure in recent years amid concerns about increased competition in the domestic market from CoStar, the American property market powerhouse, which has bought OnTheMarket, a rival property platform.
Rightmove has an 86 per cent share of the house search market in Britain and enjoys high profit margins. For every £1 spent by estate agents and developers with Rightmove, it made 69p of profit in the first half. About 19,000 estate agents and developers advertise on the portal.
REA Group, which is 61 per cent-owned by News Corp, the publisher of The Times, said on Wednesday that it was disappointed after its sweetened offer of 341p in cash and 0.0422 new REA shares had been rejected. The Melbourne-based company said that it had had “no substantive engagement with Rightmove” and urged shareholders to “encourage Rightmove’s board to engage in constructive discussions”.
Under Takeover Panel rules REA, which was founded in 1995 and has a market capitalisation of A$26 billion (£13 billion), has until Monday, September 30, to make a firm offer or walk away.