REA Group Ltd has made a fourth non-binding indicative proposal to the Board of Directors of Rightmove plc, offering a possible cash and share offer for the entire issued and to be issued share capital of Rightmove. The terms of the Fourth Proposal imply a total offer value of 781 pence for each Rightmove share, representing an increase of 11 per cent. on the implied total value of the Initial Proposal of 705 pence per share. This implies a 41 per cent. premium to Rightmove's undisturbed share price of 556 pence on 30 August 2024 and a 45 per cent. premium to Rightmove's 12-month and 24-month volume weighted average share price of 540 pence.
Based on the undisturbed share price of REA's shares of A$219.00 on 30 August 2024, the Fourth Proposal implies a total offer value of 821 pence for each Rightmove share, representing a 48 per cent. premium to Rightmove's undisturbed share price of 556 pence on 30 August 2024 and a 52 per cent. premium to Rightmove's 12-month and 24-month volume weighted average share price of 540 pence.
Under the terms of the Fourth Proposal, shareholders of Rightmove would receive 346 pence in cash and 0.0417 new REA shares for each Rightmove share, as well as a special dividend of 6 pence in cash. Rightmove shareholders would hold approximately 20 per cent. of the combined group's issued share capital following completion of the proposed transaction.
REA will make a mix and match facility available to Rightmove shareholders, enabling them to elect to vary the proportions in which they receive new REA shares and cash in respect of their holdings in Rightmove shares. The cash component of the Fourth Proposal is expected to be fully financed through long-term third-party debt and existing cash resources.
The Special Dividend of 6 pence would be paid by Rightmove and is expected to be paid in accordance with the ordinary course timing for the payment of Rightmove's final dividend or at the closing of the proposed transaction. REA has a longstanding track-record of creating value for shareholders, with its share price increasing by more than 300 per cent. over the last 10 years and by over 75 per cent. in the last two years.
REA believes that the proposed transaction will be EPS accretive and will target a leverage ratio for the combined group of less than 3x within 18 months post-completion. REA continues to believe that the Fourth Proposal represents a highly compelling proposition for Rightmove's shareholders at a significant premium to relevant trading metrics, providing a combination of immediate value certainty in cash and the opportunity to benefit from the future value creation of the combined business. Today the company's shares have moved 0.8% to a price of $26.59. Check out the company's full 8-K submission here.
