Rea (ASX:REA) is an online property portal business. The primary component of the business is the online property portal realestate.com.au which dominates the Australian property online listing market. They also own 78% of the largest property portal in India. In addition they own 20% of Move Inc. in the USA.
They did own 17.3% of PropertyGuru (NYQ:PGRU) which is a property portal in Southeast Asia, but sold that investment as part of a private equity buy out, realising a capital gain of A$150 million.
As part of their ambition to be a global leader in online property portals, they recently announced a takeover proposal for the UK’s largest property portal, the LSE listed Rightmove (LON:RMV). The indicative non-binding offer to take over Rightmove is for 305 pence in cash and 0.0381 new REA shares for each RMV share. That equates to a total of 705p per RMV share as at the date the offer was made.
Were the offer to be successful, Rightmove shareholders would hold approximately 18.6% of the combined group’s issued share capital. REA said they would seek a dual listing on the LSE should the deal succeed. Rightmove’s board of directors promptly rejected the offer, but it is unlikely REA will walk away immediately. The stock is in play.
REA has a very concentrated ownership structure with News Corp (ASX:NWS) owning 61% of the shares. This would be diluted to 50% of the register if the deal went through as structured in the proposal. Newscorp also owns the other 80% of Move Inc which is not owned by REA.
For those that have a subscription plan that includes UK stocks you can review Rightmove yourself. For those that don’t, I will provide a brief overview.
Rightmove
Rightmove has a StockRank of 70. It ranks very highly for Quality and Momentum and very poorly for Value. This is the same pattern as REA Group. RMV listed back in 2006 and the share price has been on a steady upward march, aside from a few hiccups along the way. They have a market capitalisation of approximately A$10.5 billion compared to REA’s A$26.5 billion. Similarly, their revenue is about 44% of the revenue of REA.
Both companies enjoy high…
