The REA Group Limited (ASX: REA) share price was a positive performer on Wednesday.
At one stage, the property listings company’s shares rose 3.5% to a record high of $165.37.
The REA Group share price ultimately ended the day 3% higher at $164.40.
Why did the REA Group push higher today?
The REA Group share price was given a boost in afternoon trade from news that the Foreign Investment Review Board (FIRB) has given the tick of approval to its acquisition of mortgage broker Mortgage Choice Limited (ASX: MOC).
According to the release, REA has received written correspondence from FIRB that the Commonwealth has no objections under the Foreign Acquisitions and Takeovers Act 1975 to the proposed acquisition of Mortgage Choice by way of a scheme of arrangement.
Though, the takeover remains subject to a number of outstanding conditions. These include approval by the Mortgage Choice shareholders at a scheme meeting scheduled for 10 June. However, this appears to be a mere formality, with the company’s directors unanimously recommending that shareholders vote in favour of the scheme.
Why is REA Group acquiring Mortgage Choice?
REA Group believes the $244 million acquisition of Mortgage Choice aligns with its financial services strategy. It notes that it will leverage REA Group’s digital expertise, high intent property seeker audience and unique data insights across a larger network.
Furthermore, management believes it provides a compelling opportunity to establish a leading mortgage broking business with increased scale. This will complement the existing Smartline broker footprint, resulting in greater national broker coverage.
Another positive is that the transaction is expected to be immediately earnings per share accretive for REA Group, with potential for future cost and revenue synergies.
REA Group’s Chief Executive Officer, Owen Wilson, commented: “The acquisition of Mortgage Choice represents an exciting opportunity for REA to create a leading broking business. It builds on our success to date, accelerating our financial services strategy while leveraging our existing strengths and capabilities.”
With the REA Group share price at a record high, the market appears to agree with Mr Wilson.