Top shareholder urges Rightmove to start ‘serious’ takeover talks with Murdoch

A top Rightmove shareholder has broken ranks to urge the company to begin “serious” takeover talks with Murdoch-controlled Australian property portal REA.

AXA Investment Managers, which holds a £67m stake in Rightmove, said the board should start to engage with REA after rebuffing its third takeover offer in as many weeks.

It comes after REA appealed directly to Rightmove investors on Wednesday morning, urging them to bring their board to the negotiating table.

Jamie Forbes-Wilson, fund manager at AXA, said: “We would agree that it feels a little opportunistic for REA to be coming along at this time, but it is also recognition that REA sees Rightmove as the high-quality business that we as long-term holders of the share think that it is.”

“This feels like the starting point for a serious conversation between two businesses that in combination could be a pretty exciting prospect.”

REA’s attempt to get Rightmove shareholders on side comes after its latest £6.1bn bid was rejected by the business, with a takeover deadline looming on Sept 30.

Analysts at Jefferies suggested it may be a “last throw of the dice” for REA, which said it had grown “frustrated” with Rightmove’s refusal to engage.

The latest offer for the UK property website was worth 770p per share, higher than previous bids worth 705p and nearly 750p per share, which valued Rightmove at £5.6bn and £5.9bn, respectively.

AXA, which also holds a small stake in REA worth just over £1m, said the opening offer was “pretty low-balled” and that it was hoping for an offer worth at least 800p per share.

But Mr Forbes-Wilson said the shareholder saw the tie-up as an “attractive prospect”, especially plans to apply for a dual listing in London and Australia.

He added: “The combination of REA’s global market diversification with a bit more UK in it as well would create a pretty interesting combined company.”

However, a separate top 10 shareholder backed Rightmove’s board, saying it agreed that the revised offer was unattractive and “materially undervalues” the company.

The latest twist follows an update from REA to the London Stock Exchange on Wednesday, which said its improved offer represented a “highly compelling proposition” for Rightmove shareholders.

The online digital advertising company said: “REA is disappointed by the latest rejection from the board of directors of Rightmove and is frustrated that, save for the rejection of REA’s three previously disclosed proposals, REA has still had no substantive engagement with Rightmove.

“REA urges Rightmove shareholders to encourage the board of directors of Rightmove to engage in constructive discussions with REA to work towards a recommended transaction.”

REA said its deal would provide Rightmove shareholders with certainty and give them the opportunity to reap rewards from the combined business.

The Australia-based firm said it remains “ready to engage” with Rightmove’s board of directors.

The escalation comes days after REA said it was “genuinely disappointed” about Rightmove’s failure to engage.

Rightmove branded REA’s initial approach in early September “opportunistic” while some investors have also slammed the structure of the offer, which is based on a mix of cash and shares in the combined group.

In response, REA has claimed that the FTSE 100 member’s share price has lacked any “sustained upward momentum for two years”, despite the company’s buyback programme and revised strategy.

Owen Wilson, the chief executive of REA, said on Monday: “We live in a world of intensifying competition and this proposed transaction would bring together two highly complementary digital property businesses for investment and growth.”

The continued pursuit comes as Mr Murdoch’s News Corp seeks to further diversify its business beyond media, with the patriarch’s eldest son, Lachlan soon set to take control of the company.

Shares in Rightmove fell by 1.5pc on Wednesday.