Rightmove Shares Gap Up As REA Group Increases Takeover Proposal

Rightmove's share price (LON: RMV) gapped up to 700p on the open, having closed out the previous week at 674.4p. This 3%+ move comes as REA Group, the Australian online property giant, has sweetened its offer for the UK firm in a bid to win over shareholders.

It marks the third attempt by REA to acquire Rightmove, with the latest proposal valuing the company at approximately £6.1 billion.

The offer consists of a combination of cash (341p per share) and REA shares (0.0422 new shares for each Rightmove share), translating to an implied total value of 770p per share.

The new proposal represents a significant increase compared to REA's initial offer of 705p per share and a 9.2% jump from the previous revised proposal of 749p a share.

In addition, the new offer boasts a premium of 39% compared to Rightmove's undisturbed share price before the takeover talks began and 41% – 43% in comparison to Rightmove's various average share price metrics over 6, 12 and 24 months.

REA claims it hasn't received any substantial response from Rightmove despite their repeated proposals.

Owen Wilson, CEO of REA, expressed disappointment at the lack of engagement, with his company urging Rightmove to “engage in constructive discussions.”

Rightmove, however, has previously characterised REA's approaches as “wholly opportunistic.” Meanwhile, REA said: “Rightmove's share price has lacked any sustained upward momentum for two years.”

REA argues that the proposed merger would create a global leader in digital property, offering numerous advantages such as unlocking value, enhancing customer value, boosting Rightmove's growth, knowledge transfer and innovation, and a more attractive investment opportunity.

The cash portion of the offer will be financed through debt and existing resources.

REA also reiterated its plan to obtain a secondary listing of its shares on the London Stock Exchange for wider investor access.

There's no guarantee a formal offer will be made or that a deal will materialise.

This revised proposal puts the ball back in Rightmove's court. With a significant premium on the table, shareholders may pressure the board to consider the offer seriously.