Rightmove bidding battle shows that UK plc isn’t ‘for sale at any price’
A “lack of engagement” from Rightmove may have come as a surprise to Rupert Murdoch’s property group REA after it tabled not one but two takeover offers for the British company this month.
On Monday, REA’s boss Owen Wilson said he was “genuinely disappointed” that Rightmove was unmoved by the interest, as the Australian firm sweetened its deal for the third time. REA mooted an improved bid of 770p per share, including 341p in cash and 0.0422 new REA shares.
However, the apparent stand-off between REA and Rightmove, which is still mulling the latest deal, could be taken as a hopeful sign that British companies are resisting foreign takeovers that undervalue them.
Rightmove complained earlier this month that REA’s second offer was “wholly opportunistic” and “fundamentally undervalued” the business and its future prospects.
The London-listed company’s shares are currently trading at around 690p, 10 per cent lower than REA’s latest offer. According to AJ Bell’s investment director Russ Mould, this leaves a “slim chance” that Rightmove will accept the proposal.
The tussle comes as London has witnessed a wave of takeover deals as foreign investors have pounced on British firms trading at depressed prices. By the middle of this year, £94bn worth of companies had exited the London Stock Exchange through takeovers or de-listings, fuelling concerns that UK firms are systemically undervalued relative to their US counterparts.
Among the high-profile names that were snatched up was cybersecurity darling Darktrace, taken private by US equity giant Thoma Bravo. Any acquisition of Rightmove would be another major blow to the London Stock Exchange, which has been struggling to stem the tide of companies leaving the market.
However, the latest stalemate may offer a glimmer of hope.
“Good to see UK plc boards backing up their comments on undervalued public equity with actions. A sign of more boardroom confidence,” said Simon French, chief economist and head of research at Panmure Liberum, in a post on X.
AJ Bell’s Mould added: “Rightmove digging in its heels and refusing to be bought on the cheap would also show that UK plc isn’t for sale at any price.”
REA looks serious about owning Rightmove but can it afford to raise its offer further?
Analysts at Panmure Liberum said the latest bid “underscores that REA Group doesn’t have the financial resources to significantly improve its offer,” pointing to the company’s plans to deleverage over the next 18 months while maintaining dividend payments.
Tech and media analyst Alex Degroote said Rightmove “should be looking for 1000p”, while Peel Hunt believes Rightmove’s valuation should start at a multiple in the low 20s on an enterprise value (EV) to its earnings before interest, taxes, depreciation, and amortization (EBITDA) basis, higher than its current valuation of 19.6 times for FY25.
As Rightmove holds out, other analysts say REA sounds like it is growing impatient, with the tone of its announcements becoming more assertive.
“We see a rejection by Rightmove of this latest offer as increasing the risk that REA could elect to forego a recommended offer (i.e. REA could go ‘hostile’),” Jefferies analysts said.