The Rupert Murdoch-backed real estate company REA Group has abandoned its attempt to take over the website Rightmove after its fourth offer was rebuffed on Monday.
The Australian property group majority owned by Murdoch’s News Corp announced on Monday that it had decided not to make a formal bid, hours after Rightmove’s board rejected its £6.2bn proposal made on Friday.
REA told the City it was withdrawing its possible offer, having failed to win over the UK real estate portal’s board.
The defeat is a blow to News Corp, which had hoped to bolt a successful property company on to its UK operations. Rightmove, which is strongly cash generative, could have worked as a cash cow to support the Murdoch’s media businesses.
In a statement to the London stock market, REA said it had hoped to create a “global and diversified digital property company”, with market-leading positions in Australia and the UK.
Owen Wilson, the chief executive of REA, said the company had decided to remain “financially disciplined”, and would now focus on “the many other opportunities ahead of us”.
He said: “Against a backdrop of intensifying global competition, we approached Rightmove’s board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders.
“We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us.”
Wilson added that REA had a strategy to expand in its core business, and that India was an “exceptional opportunity for growth”.
REA chose to walk away five hours before a “put up or shut up” deadline to either make a firm offer or walk away for six months. Earlier on Monday, Rightmove rejected the Australian company’s fourth offer, and said that if it wished to make a fifth, then it should make a “best and final proposal” before the 5pm cutoff.
“The board of Rightmove has fully reviewed the latest proposal with its financial and legal advisers,” it said. “The board has concluded that the latest proposal remains unattractive and continues to materially undervalue Rightmove and its future prospects and that the board cannot recommend the latest proposal to Rightmove shareholders.”
The now-rejected cash and share offer valued each Rightmove share at 780p, and the entire company, which is listed on the FTSE 100 share index, at about £6.2bn.
Shares in Rightmove tumbled by 8% as news of REA’s move broke, down to 614p. They had been worth 555p before news of REA’s initial interest was revealed in the press at the end of August.
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Rightmove also rejected REA’s claim that it had failed to engage with its offers. The board said its chair, Andrew Fisher, had met Hamish McLennan, the chair of REA, in person to discuss the fourth offer.
“Rightmove has taken every phone call that REA has made since its interest was first made public, with a level of engagement which in Rightmove’s view is customary and appropriate in the context of an unsolicited and unilateral series of approaches, made to a UK listed company, where the possible offeror is taking an incremental and iterative approach to price discovery,” it said.
Rightmove also refused to accede to REA’s request for an extension to the “put up or shut up” deadline.
Rightmove also declined to allow the Australian company access to “due diligence information” so it could consider a potential fifth proposal.
In 2001, Rupert Murdoch’s son Lachlan took control of REA, buying a 44% stake in the struggling Australian property company for A$2m (£1.3m). Since the Murdochs sold some of their media crown jewels and Rupert retired from leadership of the rest last year, the property company has taken on greater importance for News Corp.
The investment is seen as one of Lachlan’s main contributions to the family’s wealth.
