Rightmove owners would have received a 27% premium on their shares under the terms of the cash-and-stock deal suggested by the Australian real estate listing company, which is 62% controlled by Rupert Murdoch's News Corp.

REA wanted to increase its presence in profitable international areas, therefore it made this move. In order to save the deal, REA can think about going straight to the shareholders or enhancing its offer.

The offer, which came with 0.0381 new REA shares and 305 pence in cash for each Rightmove share, was 27% more than Rightmove's closing price of 556 pence on August 30, 2024.

The agreement was subject to due diligence and was not binding. Rightmove has not replied to requests for comments submitted outside of usual UK business hours, nor has it given a justification for rejecting the proposal.

The denial is a blow to REA Group, which wanted to buy Rightmove in order to expand more quickly into other markets.

The UK property market is three times larger than Australia's, according to Jefferies analysts, which makes the possible acquisition more alluring for REA.

Rightmove shareholders would have owned about 18.6% of the combined company had the deal gone through. Existing cash reserves and debt were to be used to finance the cash element of the offer.

According to analysts, REA would have to issue roughly 30 million additional shares, which may cut News Corp's ownership of REA to roughly 50%.

After the first offer was turned down by Rightmove's board, REA Group might think about going straight to the company's shareholders rather than to the board.

This action may put pressure on the board to reevaluate the offer, especially if the proposed 27% premium is attractive to shareholders.

(Sources: investing.com, invezz.com)