This is something: an Australian company, partly owned by media mogul Rupert Murdoch, is considering buying one of the most popular UK websites for property, Rightmove. News is causing ripples at both the Australian and UK markets. That would be the announcement by REA Group this past Monday of its probable offer to buy Rightmove, one of the big names in property websites in Australia. But they have not contacted Rightmove directly for a deal as yet.

Rightmove’s Stock Skyrockets

Following the announcement from the REA Group, Rightmove stocks jumped a tremendous 25%! That means Rightmove’s value surged to £5.4 billion, making it the fastest-rising stock on the FTSE 100-a key index of major companies listed in London. For some perspective, shares rose from £5.55 last Friday to as much as £6.96 this Monday morning-the highest they have been since March 2022. Clearly, investors got pretty excited at the prospect of the deal!

The UK Property Scene Heats Up

Rightmove is one of the major players in the UK property market, helping people find homes to buy or rent. But it may have cause for concern in the near future. Recently, a US-based property firm called CoStar bought OnTheMarket, another UK property website that had been looking to take on Rightmove and Zoopla, the second-biggest site. This could raise competition for Rightmove.

If the formal offer by REA Group goes through, it will again be a case of a big company leaving the London Stock Exchange. This comes after the news of similar such departures-the main listing of TUI, the tourism company, shifted to Frankfurt, while the cybersecurity company Darktrace was acquired by a US investor.

What Is REA Group?

So, exactly who is REA Group? The company, now worth billions, started in a garage in Melbourne, Australia, back in 1995 during the growth of the dotcom boom. Today, it owns some property websites in Australia like realestate.com.au and property.com.au with a data company called Proptrack. It also operates under brands in India and the US, like Realtor.com. Although REA once attempted to enter the UK market, it sold that business to Zoopla back in 2009.

The majority of REA Group is owned by News Corp – Rupert Murdoch’s company – which holds 61% of its shares. Murdoch’s company first invested in REA way back in 2001 and the group is now quite valuable, sitting at a worth of about A$29 billion (£15 billion) today. In fact, REA Group is now worth more than News Corp itself!

What Could This Deal Mean for Rightmove?

Rightmove is an established organization, primarily founded in 2000 by four U.K. estate agencies: Countrywide, Connells, Halifax, and Royal & Sun Alliance. It was a free site to begin with but started charging for property listings back in the year 2002. Rightmove was listed publicly on the London Stock Exchange in 2006. Currently, its largest shareholders are Kayne Anderson Rudnick, a Los Angeles-based investment manager with 20%, and Lindsell Train, a British investment manager with 6.6% interest.

REA Group views this as a great fit because both companies are market leaders; both have similar values like innovation and strong brand presence. It also notices opportunities in growth areas such as mortgages and commercial real estate, where REA has considerable experience.

But REA Group has until 5 p.m. on September 30 to decide whether to make a formal offer or walk away. And even then they say there’s no guarantee they will go ahead with the bid.
Analysts Have Their Say

Jessica Pok, an analyst at investment bank Peel Hunt, said Rightmove has been undervalued by the market due to fears about the UK housing market and the competition from smaller players, including CoStar’s OnTheMarket. She thinks it still remains a very investable business with a great core business foundation in property listings and space for growth in ancillary products such as mortgages and rentals.

Giles Thorne, an analyst at Jefferies, another investment bank, said he suspects that REA is interested in Rightmove mainly for financial reasons rather than strategic fit. He says there are considerable divergences in the property markets in the UK and Australia, so there would be only limited cross-border synergies between the companies. Still, he sees at least some positives for Rightmove, such as being able to learn from REA’s experience with mortgages and commercial property.

What’s Next for Rightmove?

What’s in store for Rightmove and its likely new owner? Depending on whether REA Group makes a formal offer, that could bring in fresh opportunities for expansion and innovation. Alternatively, it might only mean another British company disappears from the London Stock Exchange into the realms of those recently lost.

Whether REA Group decides to go ahead with the bid or not, one thing is pretty clear: Rightmove stands in a very privileged position. New competition is hot on its heels, yet big shots appear to believe in its potential for a bright enough future. The clock is ticking, and all eyes are on what REA Group will further decide on. Will it reach, or will it retreat? Stay tuned!