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(Sharecast News) - Rightmove has rejected a £5.6bn takeover proposal from Australian peer REA Group, saying it undervalues the UK property platform's future prospects.
On 5 September, REA proposed 305p in cash and 0.0381 new REA shares for each Rightmove share, which implied an offer value of 698p. This represents a 26% premium to the closing price on 30 August - the last trading day before REA confirmed speculation about its intentions.
Under the terms of the proposal, which REA calls a "highly compelling proposition", Rightmove shareholders would hold 18.6% of the enlarged company, which would be listed in both London and Sydney.
REA's intended move to apply for a secondary listing in the UK 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", it said in a statement.
REA claims that a tie-up of the two firms would "positively contribut[e] to the property market ecosystem in the UK", while it would be able to invest more to support Rightmove to accelerate growth in certain areas.
"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 said.
Rightmove, however, urged its shareholders not to take any action, saying the proposal was "wholly opportunistic and fundamentally undervalued Rightmove and its future prospects".
After examining the terms with financial advisers, the board unanimously rejected the proposal on Tuesday.
REA now has until 30 September to either announce a firm intention to make an offer or step away, though that deadline can be extended.
