REG - REA Group Ltd Rightmove Plc - REA Group - update regarding Rightmove plc

RightmoveAnnouncement

11/09/2024 07:00

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RNS Number : 6809D  REA Group Ltd  11 September 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

THIS IS AN ANNOUNCEMENT OF A POSSIBLE OFFER UNDER THE CITY CODE ON TAKEOVERS
AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE A FIRM INTENTION TO MAKE AN
OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY FIRM
OFFER WILL BE MADE.

For immediate release

11 September 2024

REA Group Ltd ("REA")

Update regarding Rightmove plc

This announcement is made in accordance with REA's obligations as a company
whose shares are listed on the Australian Securities Exchange ("ASX").

Further to recent press speculation in relation to REA's possible offer for
Rightmove plc ("Rightmove"), REA confirms that on 5 September 2024 it made a
non-binding indicative proposal to the Board of Directors of Rightmove
regarding a possible cash and share offer for the entire issued and to be
issued share capital of Rightmove (the "Proposal"). REA was informed on 10
September 2024 that the Rightmove Board rejected the Proposal.

Under the terms of the Proposal, ordinary shareholders of Rightmove would
receive for each Rightmove share:

305 pence in cash and 0.0381 new REA shares

Based on the closing share price of REA's shares of A$205.51 and the A$/£
exchange rate of 1.956 on 5 September 2024, being the date the Proposal was
made to the Board of Directors of Rightmove, the Proposal implies a total
offer value of 705 pence for each Rightmove share and values Rightmove's
entire issued and to be issued ordinary share capital at approximately £5.6
billion.

The terms of the Proposal represent:

·      a 27 per cent. premium to Rightmove's undisturbed share price of
556 pence on 30 August 2024 (being the last business day prior to the date of
REA's possible offer announcement on 2 September 2024);

·      a 29 per cent. premium to the Rightmove's 6-month volume weighted
average share price of 548 pence;

·      a 31 per cent. premium to the Rightmove's 12-month volume
weighted average share price of 540 pence; and

·      an enterprise value multiple of approximately 20.5x Rightmove's
EBITDA for the twelve months ended 30 June 2024 of £272 million.

 

Under the terms of the Proposal, Rightmove shareholders would hold
approximately 18.6 per cent. of the combined group's issued share capital
following completion of the proposed transaction. The cash component of the
Proposal is expected to be funded through third party debt and existing cash
resources. Given the strong growth and high cash generation of both REA and
Rightmove, REA expects the enlarged group will be able to rapidly delever,
consistent with REA's track record.

REA intends to apply for a secondary listing of all of its ordinary shares in
London, which would enable trading in REA ordinary shares on both the London
Stock Exchange and the Australian Securities Exchange in a fully fungible
manner. This would provide the opportunity for a wider pool of investors to
gain exposure to a global and diversified digital property company on the
London Stock Exchange.

The Proposal combines certainty of value, in cash, at a significant premium to
recent trading while at the same time giving Rightmove shareholders the
opportunity to benefit from the future value creation of the combined
business.

 

 

REA believes the Proposal represents a highly compelling proposition to:

·      unlock value for both Rightmove and REA shareholders by creating
a global and diversified digital property company, with strong margins and
significant cash generation, underpinned by number one positions in Australia
and the UK;

·      enhance customer and consumer value across the combined portfolio
utilising REA's globally leading capabilities and expertise;

·      apply REA's experience in investing in and growing adjacencies to
support Rightmove in its ambition to accelerate expansion in these areas,
while minimising execution risk;

·      benefit from knowledge transfer, leading technical capabilities
as well as support from targeted investment and innovation in a competitive
market; and

·      enhance the UK property experience for buyers, sellers, and
renters, positively contributing to the property market ecosystem.

Under the terms of the Proposal, Rightmove shareholders would remain entitled
to receive the 2024 interim dividend of 3.7 pence per share, as announced by
Rightmove on 26 July 2024, without any reduction to the terms of the Proposal.

The Proposal is non-binding and subject to customary conditions, including
completion of due diligence to the satisfaction of REA. REA reserves the right
to waive in whole or in part any of the conditions to the Proposal.

There can be no certainty that an offer to Rightmove shareholders will be made
by REA or that any transaction will proceed. REA shareholders do not need to
take any action at this time.

In accordance with Rule 2.5(a) of the Code, REA reserves the right to: (i)
introduce other forms of consideration and / or vary the mix or composition of
consideration of any offer; and (ii) to implement the transaction through or
together with a subsidiary of REA or a company which will become a subsidiary
of REA. REA also reserves the right to make an offer for Rightmove at a lower
value and/or on less favourable terms than those described in this
announcement: (i) with the agreement or recommendation of the Board of
Rightmove; (ii) if a third party announces a firm intention to make an offer
for Rightmove; (iii) following the announcement by Rightmove of a Rule 9
waiver transaction pursuant to Appendix 1 of the Code or a reverse takeover
(as defined in the Code). If after the date of this announcement Rightmove
declares, makes or pays any dividend or distribution or other return of
capital to its shareholders, other than the previously announced interim
dividend of 3.7p per Rightmove share declared on 26 July 2024, REA reserves
the right to make an equivalent reduction to the Proposal.

REA will continue to keep the ASX informed in accordance with its obligations.

The release of this announcement was authorised by the Disclosure Committee.

 

Enquiries:

 

REA Group Ltd
Investors:
            REA Group Ltd Media:

Alice
Bennett
            Angus Urquhart

Executive Manager Investor Relations
            General Manager Corporate Affairs

P: +61 409 037
726
            P: + 61 437 518 713

E:
ir@rea-group.com
            E: angus.urquhart@rea-group.com

 

 

 Deutsche Bank (Financial adviser to REA)

 Gavin Deane         +44 (0) 207 545 8000

 Oliver Ives

 Jennifer Conway

 Emma-Jane Newton

Brunswick Group (Media enquiries)

 Simon Sporborg   +44 (0) 207 404 5959

 Nina Coad       reagroup@brunswickgroup.com (mailto:reagroup@brunswickgroup.com)

 Paul Durman

 Jack Walker

Important notices

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or solicitation of any offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities or the
solicitation of any vote or approval in any jurisdiction, whether pursuant to
this announcement or otherwise.

The release, distribution or publication of this announcement in jurisdictions
outside the United Kingdom and Australia may be restricted by laws of the
relevant jurisdictions and therefore persons into whose possession this
announcement comes should inform themselves about, and observe, any such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities law of any such jurisdiction.

 

Sources of information and bases of calculation

i.    Any references to the issued and to be issued share capital of
Rightmove are based on:

·      788,750,604 basic ordinary shares as at 2 September 2024, based
on Rightmove's Rule 2.9 disclosure;

·      plus 4,078,371 shares reflecting the dilutive impact of Rightmove
share options and awards outlined in the Company's FY23 Annual Report based on
the treasury stock method.

ii.    The enterprise value multiple of 20.5x is based on:

·      an enterprise value of £5.6bn. This is calculated as Rightmove's
fully diluted equity value based on the Proposal terms adjusted for net cash
and lease liabilities of £21m as at 30 June 2024;

·      an EBITDA of £272m for the 12 months to 30 June 2024. EBITDA
defined as Rightmove's underlying operating profit plus depreciation and
amortisation.

iii.   The Proposal value per Rightmove share has been calculated by
reference to a closing price of A$205.51 per REA share (being the last closing
price on 5 September 2024, the date of the Proposal) and a GBP / AUD exchange
rate of 1.956.

iv.   VWAPs are calculated with reference to the period ending 30 August
2024, being the last business day prior to the possible offer announcement on
2 September 2024.

v.   Certain figures included in this announcement have been subject to
rounding adjustments.

 

Notice to US Rightmove shareholders

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US
Exchange Act, REA or its nominees, or its brokers (acting as agents), may from
time to time make certain purchases of, or arrangements to purchase, Rightmove
shares outside the United States, other than pursuant to an offer, before or
during the period in which an offer, if made, remains open for acceptance.
Also, in accordance with Rule 14e-5(b) of the US Exchange Act, Deutsche Bank
will continue to act as an exempt principal trader in Rightmove shares on the
London Stock Exchange. These purchases may occur either in the open market at
prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the United
Kingdom, will be reported to a Regulatory Information Service and will be
available on the London Stock Exchange website, www.londonstockexchange.com
(http://www.londonstockexchange.com) .

This announcement does not constitute an offer to sell or the solicitation of
an offer to buy any securities in the United States. Any securities referenced
in this announcement have not been registered under the US Securities Act and
may not be offered or sold in the United States absent registration under the
US Securities Act, or pursuant to an exemption from, or in a transaction not
subject to, such registration requirements. Any offer would be subject to
disclosure and other procedural requirements, including with respect to
withdrawal rights, offer timetable, settlement procedures and timing of
payments, that are different from those applicable under US domestic tender
offer procedures and law.

 

Disclaimer

Deutsche Bank AG is a stock corporation (Aktiengesellschaft) incorporated
under the laws of the Federal Republic of Germany with its principal office in
Frankfurt am Main. It is registered with the local district court
(Amtsgericht) in Frankfurt am Main under No HRB 30000 and licensed to carry on
banking business and to provide financial services. The London branch of
Deutsche Bank AG is registered as a branch office in the register of companies
for England and Wales at Companies House (branch registration number BR000005)
with its registered branch office address and principal place of business at
21 Moorfields, London EC2Y 9DB. Deutsche Bank AG is subject to supervision by
the European Central Bank (ECB), Sonnemannstrasse 22, 60314 Frankfurt am Main,
Germany, and the German Federal Financial Supervisory Authority (Bundesanstalt
für Finanzdienstleistungsaufsicht or BaFin), Graurheindorfer Strasse 108,
53117 Bonn and Marie-Curie-Strasse 24-28, 60439 Frankfurt am Main, Germany.
With respect to activities undertaken in the United Kingdom, Deutsche Bank AG
is authorised by the Prudential Regulation Authority. It is subject to
regulation by the Financial Conduct Authority and limited regulation by the
Prudential Regulation Authority. Details about the extent of Deutsche Bank
AG's authorisation and regulation by the Prudential Regulation Authority are
available from Deutsche Bank AG on request.

Deutsche Bank AG, acting through its London branch ("Deutsche Bank") is acting
as financial adviser to REA and no-one else in connection with the matters
described in this announcement and will not be responsible to anyone other
than REA for providing the protections afforded to clients of Deutsche Bank,
nor for providing advice in connection with the subject matter of this
announcement or any other matter referred to in this announcement.

 

Publication on website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available, subject to certain restrictions relating to persons resident in
restricted jurisdictions, on REA's website at www.rea-group.com
(http://www.rea-group.com.au/) by no later than 12 noon (London time) on the
business day following the date of this announcement. The content of the
website referred to in this announcement is not incorporated into, and does
not form part of, this announcement.

 

About REA Group Ltd (www.rea-group.com (http://www.rea-group.com/) )

REA Group Ltd ACN 068 349 066 (ASX:REA) ("REA Group") is a multinational
digital advertising business specialising in property. REA Group operates
Australia's leading residential and commercial property websites -
realestate.com.au (http://www.realestate.com.au/) and realcommercial.com.au
(http://www.realcommercial.com.au/) - as well as the leading website dedicated
to share property, Flatmates.com.au (http://www.flatmates.com.au/) and
property research website, property.com.au. REA Group owns Mortgage Choice Pty
Ltd (https://www.mortgagechoice.com.au/) , an Australian mortgage broking
franchise group, PropTrack Pty Ltd (https://www.proptrack.com/) , a leading
provider of property data services, Campaign Agent Pty Ltd
(https://campaignagent.com.au/) , Australia's leading provider in vendor paid
advertising and home preparation finance solutions for the Australian real
estate market and Realtair Pty Ltd (https://realtair.com/) , a digital
platform providing end-to-end technology solutions for the real estate
transaction process. In Australia, REA Group holds strategic investments in
Simpology Pty Ltd, (https://simpology.com.au/home) a leading provider of
mortgage application and e-lodgement solutions for the broking and lending
industries and Arealytics, a provider of commercial real estate information
and technology in Australia. Internationally, REA Group holds a controlling
interest in REA India Pte. Ltd. operator of established brands Housing.com
(https://housing.com/) and PropTiger.com (https://www.proptiger.com/) . REA
Group also holds a significant minority shareholding in Move, Inc.,
(https://www.move.com/) operator of realtor.com in the US, the PropertyGuru
Group (https://www.propertygurugroup.com/) , operator of leading property
sites in Malaysia, Singapore, Thailand and Vietnam and Easiloan, a technology
platform for end-to-end digital processing of home loans in India.

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