Murdoch's REA Group Eyes £4.4bn Rightmove Takeover Amid Property Market Shifts

In a significant development in the online real estate sector, Rupert Murdoch's REA Group is contemplating a takeover of Rightmove, potentially valuing the UK's premier property portal at over £4.4 billion. This move comes as the property market grapples with ongoing challenges and Murdoch's media empire undergoes succession planning.

REA Group, a Melbourne-based company majority-owned by Murdoch's News Corp, has expressed interest in a cash-and-share offer for the London-listed Rightmove. The Australian property giant cited cultural alignment and operational similarities as key factors in considering the acquisition.

Rightmove, established in 2000 and the UK's dominant property portal since 2008, reported a 7% increase in revenues to £192 million for the first half of 2024. However, the company has warned of declining customer numbers due to high mortgage rates impacting the property market. These challenges reflect broader issues facing the UK real estate sector, which has been affected by factors such as Brexit, the COVID-19 pandemic, and rising interest rates since 2022.

The potential acquisition has sparked significant market interest, with Rightmove's shares surging by 25% on September 2, 2024, marking the company's largest intra-day movement on record. This reaction underscores the significance of the proposed deal in the property technology landscape.

REA Group, founded in 1995, operates a portfolio of online residential property brands across 12 countries in Asia and North America, with realestate.com as its flagship platform. The company views the potential merger as an opportunity to create a robust, growth-oriented entity with strong margins and substantial cash generation.

"The REA board believes the enlarged group would represent a highly attractive investment opportunity for both REA and Rightmove shareholders, combining robust growth with strong margins and significant cash generation, enabling continued capital appreciation and shareholder returns."

This potential takeover follows a trend of consolidation in the UK property sector. In 2023, rival platform OnTheMarket was acquired by US commercial real estate group CoStar for £99 million, indicating growing interest from international players in the UK market.

The proposed deal also occurs against the backdrop of succession planning within Rupert Murdoch's media empire. The 93-year-old mogul is attempting to modify his family trust to ensure his eldest son, Lachlan Murdoch, gains sole control of the TV and newspaper assets. This move has led to a legal dispute with his other children, which is set for trial in Nevada later in September 2024.

As the September 30, 2024 deadline for a formal offer approaches, the potential acquisition of Rightmove by REA Group could reshape the landscape of online property services, combining the strengths of two major players in the global real estate market.