By Aaditya GovindRao and Rishav Chatterjee
(Reuters) -REA Group, majority-owned by Information Corp (NASDAQ:), is contemplating shopping for British property portal Rightmove (OTC:) to create a multinational digital actual property agency, the Australian firm mentioned on Monday.
Britain’s largest property portal, Rightmove had a market worth of 4.36 billion kilos ($5.73 billion) as of Friday’s shut. It makes cash from itemizing actual property brokers on its web site.
Shares of REA, by which the Murdoch family-controlled media agency Information Corp owns a greater than 61% curiosity, fell as a lot as 8% to A$201.5 and have been on monitor for his or her worst session since December 2022.
The inventory was final down 7.7% at A$202.16 after a buying and selling pause earlier within the day.
“Despite the potential long-term benefits of a strategic acquisition, the takeover move suggests capital vulnerability and risks,” mentioned Junvum Kim, Saxo Asia Pacific senior gross sales dealer at Saxo Markets.
REA mentioned it was contemplating a doable money and share supply for London-listed Rightmove. It, nevertheless, mentioned it had neither approached nor held any talks with Rightmove.
The Australian actual property firm now has to replace the market if it has a agency intention to make a bid by Sept. 30.
Rightmove didn’t instantly reply to a Reuters’ request for remark.
“For this negotiation to be successful, it is essential for REA Group to clearly communicate to shareholders the potential benefits of this opportunity,” mentioned Ben Williamson, co-founder and co-CEO at buying and selling 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 final month, REA reported a soar in annual earnings and raised its dividend. It mentioned residential demand stays robust nationally and with decade-high rates of interest being placed on maintain, constructive market fundamentals and sturdy provide ought to assist shopper confidence.
The Australian market expects possible rate of interest cuts within the close to future to deliver again consumers to the property market.
($1 = 0.7613 kilos)