By Aaditya GovindRao and Rishav Chatterjee
(Reuters) -REA Group, majority-owned by News Corp (NASDAQ:), is considering buying British property portal Rightmove (OTC:) to create a multinational digital real estate firm, the Australian company said on Monday.
Britain’s largest property portal, Rightmove had a market value of 4.36 billion pounds ($5.73 billion) as of Friday’s close. It makes money from listing real estate agents on its website.
Shares of REA, in which the Murdoch family-controlled media firm News Corp owns a more than 61% interest, fell as much as 8% to A$201.5 and were on track for their worst session since December 2022.
The stock was last down 7.7% at A$202.16 after a trading pause earlier in the day.
“Despite the potential long-term benefits of a strategic acquisition, the takeover move suggests capital vulnerability and risks,” said Junvum Kim, Saxo Asia Pacific senior sales trader at Saxo Markets.
REA said it was considering a possible cash and share offer for London-listed Rightmove. It, however, said it had neither approached nor held any talks with Rightmove.
The Australian real estate company now has to update the market if it has a firm intention to make a bid by Sept. 30.
Rightmove did not immediately respond to a Reuters’ request for comment.
“For this negotiation to be successful, it is essential for REA Group to clearly communicate to shareholders the potential benefits of this opportunity,” said Ben Williamson, co-founder and co-CEO at trading platform InvestorHub.
“If it’s a good deal, the company shouldn’t let the initial response from investors determine whether or not it proceeds with the deal.”
Early last month, REA reported a jump in annual earnings and raised its dividend. It said residential demand remains strong nationally and with decade-high interest rates being put on hold, positive market fundamentals and robust supply should support consumer confidence.
The Australian market expects likely interest rate cuts in the near future to bring back buyers to the property market.
($1 = 0.7613 pounds)
