The REA Group Limited (ASX: REA) share price is on the move on Monday morning.
At the time of writing, the property listings company’s shares are up almost 1% to $165.71.
Why is the REA Group share price pushing higher?
Investors have been bidding the REA Group share price higher today following the release of an update on its Malaysia and Thailand operations.
According to the release, the company has entered into a binding agreement to combine its Malaysia and Thailand businesses with Asia’s largest online property portal group, PropertyGuru.
Under the proposed transaction, REA Group will transfer ownership of its Malaysia and Thailand entities to PropertyGuru in exchange for an 18% equity interest in the Singapore-based company. REA Group will also take one seat on the PropertyGuru Board.
PropertyGuru currently operates marketplaces in Singapore, Vietnam, Malaysia, Thailand and Indonesia. Management notes that the combined businesses will have access to a deeper pool of expertise, technology and investment, which it believes will accelerate innovation and provide enhanced digital solutions to home seekers, property agents, and developers.
It also notes that the transaction will provide REA Group with a strategic shareholding in a larger, more diversified company in a region that continues to experience rapid digital transformation across the real estate sector.
REA Group’s CEO, Owen Wilson, commented: “Building on the success of our operations in Malaysia and Thailand, this transaction presents a unique opportunity to create the most compelling digital property classifieds company in Southeast Asia and accelerate the next wave of proptech innovation across the region.”
The agreement contains customary termination events and is conditional on REA Group’s divestment of its 27% interest in 99 Group. It is the operator of 99.co, iProperty.com.sg, and rumah123.com. REA Group will retain ownership of its Hong Kong and Myfun businesses.
The transaction is expected to result in an overall gain on divestment of approximately $10 million.