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Australian property listing firm REA Group said on Wednesday that Britain’s largest real estate portal Rightmove had rejected its 5.6 billion pounds ($7.32 billion) cash-and-stock takeover offer.
REA, which is 62% owned by Rupert Murdoch’s News Corp , did not cite any reason for the offer’s rejection by Rightmove.
REA shares dropped 1.25% in early trade on Wednesday. Rightmove did not immediately respond to a request for comment from Reuters sent outside normal UK business hours.
Britain’s housing market is considered triple the size of Australia’s, according to Jefferies analysts, and a deal would have allowed REA to expedite growth in lucrative international markets.
The Australian company had offered to pay a total of 705 pence per Rightmove share, representing a premium of 27% to the British company’s closing price of 556 pence on Aug. 30, after which REA confirmed discussions.
The offer consisted of 305 pence in cash and 0.0381 new REA shares and was non-binding and subject to due diligence.
REA said had a deal been completed, Rightmove shareholders would have owned about 18.6% of the combined group.
The cash component of the deal was due to be funded by debt and existing cash, REA said. Analysts estimated REA would need to issue about 30 million new shares for the stock portion of the deal, which could lower News Corp’s holding down to about 50% of REA.
“If it wants to continue to pursue the deal, REA’s options now are to present the offer directly to Rightmove shareholders without board endorsement,” said E&P analyst Entcho Raykovski.
REA could sweeten the deal by increasing the cash component, though that could require a capital raising, he said.
“We see merit in the deal but wouldn’t want to see REA increase the price to a level where the financial metrics are no longer attractive,” Raykovski added.
REA said it would look to apply for a secondary listing in London regardless of whether the deal proceeded to give it access to a wider pool of investors.