REG - REA Group Ltd Rightmove Plc - REA withdraws possible offer for Rightmove

RightmoveAnnouncement

30/09/2024 12:15

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RNS Number : 2697G  REA Group Ltd  30 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 FALLING UNDER RULE 2.8 OF THE CITY CODE ON TAKEOVERS
AND MERGERS (THE "CODE")

FOR IMMEDIATE RELEASE

30 September 2024

REA Group Ltd ("REA")

Statement regarding Rightmove plc:

REA withdraws possible offer for Rightmove

REA continues to exercise the financial discipline that has underpinned
long-term value creation

Further to Rightmove's announcement on 30 September 2024 that it had rejected
REA's fourth non-binding indicative proposal (the "Fourth Proposal"), made on
27 September 2024, regarding a possible cash and share offer for the entire
issued and to be issued share capital of Rightmove plc ("Rightmove"), REA
confirms that it does not intend to make an offer for Rightmove. This is a
statement to which Rule 2.8 of the Code applies.

REA's approach to Rightmove's Board was driven by a clear strategic rationale
and the opportunity to create a global and diversified digital property
company, with strong margins and significant cash generation, underpinned by
number one positions in Australia and the UK.

REA believes the proposed combination would have provided Rightmove
shareholders the opportunity to meaningfully participate in a fast growing,
diversified, global leader whilst receiving value certainty in an operating
environment challenged by increased market competition.

Rightmove's share price has lacked any sustained upward momentum for two years
despite being supported by its ongoing share buyback programme and revised
strategy announced at last year's Capital Markets Day. The Fourth Proposal, at
an implied offer price of 775 pence per share based on REA closing price on 27
September 2024, being the date the Fourth Proposal was made, plus a special
dividend of 6 pence per share, together represented a 45% premium to
Rightmove's 12-month and 24-month volume weighted average share prices.

REA is committed to its capital allocation framework and maintains a
disciplined approach to mergers and acquisitions. The potential acquisition of
Rightmove was dependent on coming to an agreement at a fair price, which would
have required meaningful engagement and a constructive dialogue.

The first substantive engagement provided by Rightmove was an introductory
high-level Chairman-to-Chairman meeting which took place on 28 September 2024.
At the REA Chairman's request, this was followed by an additional meeting on
29 September 2024 where no presentation or any other information was given by
Rightmove to REA. The lack of meaningful engagement and the consistent lack of
information provided by Rightmove impeded the ability to progress discussions
and work together towards a recommended transaction, within the timetable
permitted. All other contact has been cursory and procedural.

REA had firmly believed that it would have been in the interests of Rightmove
shareholders for the Board of Directors of Rightmove to engage with REA and to
extend the 30 September 2024 deadline to determine whether a mutually
acceptable proposal could have been reached. REA reiterates its disappointment
that the Board of Directors of Rightmove were unwilling to do so, but REA is
excited to pursue its many other avenues for growth.

REA has a longstanding track-record of creating value for shareholders and
remains confident in the growth potential across its core business, adjacent
opportunities, and India.  REA's full year financial results, released on 9
August 2024, disclosed a 23% increase in revenues and a 27% increase in EBITDA
(excluding associates), reflecting the strength of this growth potential. With
a robust balance sheet and strong underlying cash flow, REA remains
well-positioned to fund growth across its portfolio.

Commenting on Rightmove's rejection of REA's Fourth Proposal, Owen Wilson, CEO
of REA, said:

"Against a backdrop of intensifying global competition, we approached
Rightmove's Board because we strongly believed in the opportunity to create a
globally diversified leader in the digital property sector that would benefit
both REA and Rightmove shareholders. We were disappointed with the limited
engagement from Rightmove that impeded our ability to make a firm offer within
the timetable available. They had nothing to lose by engaging with us.

"We are always financially disciplined when we look at M&A and
reinvestment in our business and will continue to focus on the many other
opportunities ahead of us. Our recent investment in Athena Home Loans is a
great example of this. We have a clear strategy to expand in our core business
and adjacent markets, and India represents an exceptional opportunity for
growth. We look forward to pursuing these opportunities and generating further
value for REA shareholders."

Under Note 2 of Rule 2.8 of the Code, REA, and any person(s) acting in concert
with it, reserves the right to set the restrictions in Rule 2.8 of the Code
aside in the following circumstances:

(a)        with the agreement of the board of directors of Rightmove;

(b)        following the announcement of a firm intention to make an
offer for Rightmove by or on behalf of a third party;

(c)        following the announcement by Rightmove of a Rule 9 waiver
proposal (as described in Note 1 of the Notes on Dispensations from Rule 9 of
the Code) or a reverse takeover (as defined in the Code); or

(d)        where the Takeover Panel has determined that there has been
a material change of circumstances.

 

The release of this announcement was authorised by the Disclosure Committee
and was made outside of hours of operation of the ASX markets announcements
platform.

 

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

 Paul Durman

 Jack Walker

 

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 4,130,729 shares reflecting the dilutive impact of Rightmove
share options and awards outlined in Rightmove's FY23 Annual Report based on
the treasury stock method.

ii.    The implied total offer value of the Fourth Proposal, which was
subject to the reservations set out in REA's announcement dated 27 September
2024, of 781 pence per Rightmove share has been calculated by reference to a
A$/£ exchange rate of 1.946 on 27 September 2024 and a closing price of
A$200.00 per REA share (being the last closing price on 27 September 2024, the
date of the Fourth Proposal) plus a 6 pence special dividend to be paid in
lieu of any final dividend for the year ending 31 December 2024.

iii.   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.

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

 

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.

 

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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