Rightmove 20% Higher Amid Acquisition Bid

Property listing website Rightmove saw its stock rise by 20% within the past week on a confirmed takeover bid made by REA Group, but the Australian company's bid leaves some doubt as to whether the acquisition will be concluded.​

The Bid on Excitement

Shares in British property listing website Rightmove rose significantly last week after REA Group, an Australian property firm majority-owned by News Corp, indicated it was considering an offer. Investors reacted positively despite little information being provided about any potential deal. REA Group stated no discussions with Rightmove and no price was mentioned. Rightmove shares increased 27% on Monday, valuing the company at £5.08 billion.

Over a week later, further details emerged: a £7.05 per share bid comprising part cash and shares, valuing Rightmove at £7.06 billion. This would combine the two companies, with former Rightmove shareholders owning 19% of the merged business. REA Group announced during Australian trading hours its offer had been declined, informing the market ahead of Rightmove's formal response later. The board unanimously rejected the proposal as opportunistic and undervaluing the company.​

The Path Forward

REA's non-binding offer had previously expressed uncertainty over deal completion. Both companies operate in the same online property listing business, with Rightmove being the largest and best-known in Britain. However, the UK market is around five times the size of Australia's, which makes REA's takeover ambition somewhat ambitious.

For most traders, particularly those who drove the price above the eventual offer, the key question now is whether the News Corp subsidiary will increase its bid. Takeover rules require a deal conclusion by the end of the month, so time remains. However, given REA's hesitancy, the lack of reciprocal interest shown, and the offer leak ahead of company contact, a potential new offer seems unlikely. The deal suggests further UK online listings market consolidation may follow last year's acquisition of OnTheMarket.com by CoStar.​

Rightmove, Up Move?

Rightmove's share price seems to have formed a symmetrical triangle pattern at 500 pence, potentially allowing further gains towards the projected 770 pence measured move. The stock may increase while remaining above 600 pence support and the near-term pivot at 650 pence. Conversely, a break below 600 pence could permit declines to 560 pence and the triangle's base, risking decreases towards 450 pence.​

Source: SpreadEx / Rightmove

Key Takeaways

Property listing website Rightmove saw its stock rise by 20% within the past week on a confirmed takeover bid by REA Group. Still, the Australian company's bid leaves some doubt about whether the acquisition will be concluded. It stated a £7.05 per share bid valuing Rightmove at £7.06 billion, which was declined by Rightmove's board as opportunistic and undervaluing the company. The key question now is whether REA Group will increase its bid before the takeover rules deadline at the end of the month. However, a potential new offer seems unlikely, given REA's hesitancy and lack of reciprocal interest.​