At the time of writing, the property listings company's shares are up 4% to $209.79.

What's going on with the REA Group share price today?

Investors have been buying the realestate.com.au operator's shares this morning after it released an update on its proposed takeover of UK-based Rightmove (LSE: RMV).

According to the release, on Monday, Rightmove rejected REA Group's fourth non-binding indicative proposal. And with the deadline for talks now over, REA Group confirmed that it does not intend to make a binding offer for Rightmove.

While this might seem like bad news, the market was never keen on the deal. So, with talks now over, investors have been buying the company's shares again.

What happened?

REA notes that its approach was driven by a clear strategic rationale and the opportunity to create a global and diversified digital property company, with strong margins and significant cash generation, underpinned by number one positions in Australia and the UK.

It also believes the proposed combination would have provided Rightmove shareholders the opportunity to meaningfully participate in a fast growing, diversified, global leader whilst receiving value certainty in an operating environment challenged by increased market competition.

And with Rightmove's share price lacking any sustained upward momentum for two years despite being supported by its ongoing share buyback programme and revised strategy announced at last year's Capital Markets Day, it feels that its fourth proposal of 775 British pence per share would have been an excellent outcome for them.

However, Rightmove's directors were unwilling to engage meaningfully with REA. The most engagement it got was an introductory high-level chairman-to-chairman meeting which took place on 28 September.

'Disappointed'

REA Group's CEO, Owen Wilson, was disappointed with the way things turned out. He said:

Against a backdrop of intensifying global competition, we approached Rightmove's Board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders. We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us.

We are always financially disciplined when we look at M&A and reinvestment in our business and will continue to focus on the many other opportunities ahead of us. Our recent investment in Athena Home Loans is a great example of this. We have a clear strategy to expand in our core business and adjacent markets, and India represents an exceptional opportunity for growth. We look forward to pursuing these opportunities and generating further value for REA shareholders.

The REA Group share price is 35% over the past 12 months.

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Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market is expected to fall on Tuesday despite a positive start to the week in the United States. According to the latest SPI futures, the ASX 200 is poised to open the day 26 points or 0.3% lower. On Wall Street, the Dow Jones rose 0.05%, the S&P 500 climbed 0.4%, and the Nasdaq rose 0.4%.

REA withdraws Rightmove offer

The Rea Group Ltd (ASX: REA) share price will be on watch today after the property listings company withdrew its takeover offer for UK-based Rightmove (LSE: RMV). REA Group's CEO, Owen Wilson, said: "We approached Rightmove's Board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders. We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us."

Oil prices mixed

It could be a subdued session for ASX 200 energy shares Santos Ltd (ASX: STO) and Karoon Energy Ltd (ASX: KAR) on Tuesday after oil prices had a mixed start to the week. According to Bloomberg, the WTI crude oil price is up 0.1% to US$68.22 a barrel and the Brent crude oil price is down 0.3% to US$71.76 a barrel. This meant that oil prices posted their third monthly decline in a row.

Life360 named as a buy

Life360 Inc (ASX: 360) shares are still great value according to analysts at Goldman Sachs. This morning, the broker has reaffirmed its buy rating on the location technology company's shares with an improved price target of $21.85. This implies potential upside of over 15% for investors. It said: "Life360's ability to manage costs while driving strong revenue growth has surprised to the upside since pivoting to profitable growth in early 2023, and we sit well ahead of Visible Alpha Consensus Data EBITDA expectations (7-10%) across FY24-26E."

Gold price fall

ASX 200 gold miners Gold Road Resources Ltd (ASX: GOR) and Regis Resources Limited (ASX: RRL) could have another poor session after the gold price dropped overnight. According to CNBC, the gold futures price is down 0.55% to US$2,653.6 an ounce. This couldn't stop the precious metal from recording its best quarter in four years.

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

At the time of writing, the online property listings company's shares are up 3% to $198.50.

Why is the REA Group share price rising?

Investors have been buying the realestate.com.au operator's shares today following the release of two announcements.

The first announcement reveals that UK online property listings company Rightmove (LSE: RMV) has rejected REA Group's improved takeover offer.

The market hasn't been particularly keen on the move. As a result, they may believe this is the end of the road for the deal and are bidding up the REA Group share price in response.

Commenting on the rejection, the company stated:

REA confirms that on 24 September 2024 the Board of Directors of Rightmove rejected the Further Improved Proposal. In their rejection, the Board of Directors of Rightmove characterised the Further Improved Proposal as unattractive and materially undervaluing Rightmove.

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.

The company has urged Rightmove shareholders to pressure its board into engaging. However, time is not on the side of REA Group with this one. UK takeover laws mean that it has until 30 September to make a firm offer. After that date, it will need to wait six months before it can return with another offer.

What else was announced?

Not everyone is rejecting REA Group's advances.

Another announcement reveals that the company has agreed to acquire a 19.9% interest in Athena Home Loans for $62 million. It is a leading digital non-bank lender and one of Australia's fastest growing fintechs.

The consideration for the transaction has been funded from the company's existing cash reserves. REA will take two seats on Athena's board.

The two parties certainly aren't strangers. REA and Athena first formed a strategic partnership in 2022, bringing together Athena's home loan products with the distribution network of REA's financial services brand, Mortgage Choice.

In June 2023, REA launched the Mortgage Choice Freedom suite of white label products, developed in collaboration with Athena, which exceeded expectations by delivering $1.2 billion in settlements in FY 2024.

REA Group's CEO, Owen Wilson, was pleased with the agreement. He said:

REA's proposed investment in Athena will further enhance our existing partnership and reinforces our commitment to providing Australian homebuyers with greater choice and a seamless consumer experience when finding and financing property.

Growing our national broker network and evolving our digital mortgage offering for the 12 million Australians who now visit realestate.com.au1 is an important part of our financial services strategy. An equity investment builds on the success of our innovative Mortgage Choice Freedom home loan products and forms a strong alliance to support the delivery of our strategy, while also benefitting from Athena's growing loan portfolio.

The REA Group share price is up 26% since this time last year despite recent wobbles.

The post REA Group share price charges higher following two big updates appeared first on The Motley Fool Australia.

At the time of writing, the property listings company's shares are down 1.5% to $196.30.

Why are REA shares dropping?

Investors have been selling the realestate.com.au operator's shares this morning after it released an update on its proposed takeover of Rightmove (LSE: RMV).

As a reminder, earlier this month REA Group made an offer of 305 pence in cash and 0.0381 new REA shares. This implied a total offer value of 705 pence per share, which valued Rightmove at GBP5.6 billion or $11 billion.

However, while the market felt that REA Group was overpaying, this sentiment wasn't shared by Rightmove. The offer was swiftly rejected by its board. It concluded that the offer "was wholly opportunistic and fundamentally undervalued Rightmove and its future prospects."

What's the latest?

This morning, REA confirmed that on 16 September it made a revised non-binding indicative proposal.

The company tabled an offer of 749 pence for each Rightmove share, which represents a 6.25% increase on its original offer.

However, once again, the Rightmove board rejected REA Group's proposal. The company explains:

The Improved Proposal was rejected by the Board of Directors of Rightmove on 18 September, continuing to characterise it as fundamentally undervaluing Rightmove.

Third time lucky?

This morning, REA revealed that it has come back to the table with a third offer. On 22 September, the company increased its offer to 341 pence in cash and 0.0422 new REA shares.

Based on its prevailing share price, this represents an offer of 770 pence per share, which implies a total consideration of approximately GBP6.1 billion or A$11.9 billion.

This is a 9.2% increase on the initial proposal and represents a 39% premium to Rightmove's undisturbed share price of 556 pence on 30 August.

If accepted, Rightmove shareholders would hold approximately 20% of the combined group's issued share capital following completion of the proposed transaction.

REA's CEO, Owen Wilson, commented:

We believe that the combination of our world-leading expertise and technology with the attractive Rightmove business will create an enhanced experience for agents, buyers and sellers of property. 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.

We have today increased our proposal to an implied value of 770 pence – it provides a combination of immediate value certainty in cash and at the same time gives Rightmove shareholders an increasing opportunity in core digital property and adjacencies where we have much expertise. We are genuinely disappointed at the lack of engagement by Rightmove's Board and we strongly encourage the Rightmove Board to engage.

The post REA Group shares drop on new $11.9 billion Rightmove offer appeared first on The Motley Fool Australia.

In early trade, the property listings company's shares are down 2% to $198.55.

Why is the REA Group share price dropping?

The realestate.com.au operator's shares are under pressure today after it revealed that it has tabled a takeover offer for UK peer Rightmove (LSE: RMV).

According to the release, REA Group made a non-binding offer of 305 pence in cash and 0.0381 new REA shares on 5 September.

Based on the prevailing REA Group share price of $205.51 and current exchange rates, this implies a total offer value of 705 pence per share. This values Rightmove at GBP5.6 billion or $11 billion.

Management notes that this represents a 27% premium to Rightmove's undisturbed share price of 556 pence on 30 August 2024. It also equates to an enterprise value multiple of approximately 20.5x Rightmove's EBITDA for the twelve months ended 30 June 2024 of GBP272 million.

Under the terms of the proposal, Rightmove shareholders would end up holding approximately 18.6% of the combined group's issued share capital following completion of the proposed transaction.

The cash component of the proposal would be funded through third party debt and existing cash reserves. But given the strong growth and high cash generation of both businesses, management believes the enlarged group would be able to rapidly delever.

And to make things easier for existing Rightmove shareholders, REA would apply for a secondary listing on the London Stock Exchange. It notes that this would also provide the opportunity for a wider pool of investors to gain exposure to a global and diversified digital property company.

Offer rejected

Unfortunately for REA Group, the Rightmove board isn't biting.

REA was informed on 10 September that the Rightmove board has rejected the proposal.

No explanation was given for the rejection, but it seems that the board may believe that the proposal undervalues the UK company.

This is despite REA Group believing that its "proposal combines certainty of value, in cash, at a significant premium to recent trading while at the same time giving Rightmove shareholders the opportunity to benefit from the future value creation of the combined business."

Judging by the REA Group share price performance today, it seems that the market may now be concerned that the company will return with a higher offer to try and get a deal over the line.

Given that some analysts believe REA Group is already paying too much, it's not a surprise to see its shares dragged lower on this rejection.

The post REA Group share price drops after $11b Rightmove takeover offer rejected appeared first on The Motley Fool Australia.

REA announced that it is considering acquiring the British property company Rightmove plc (LSE: RMV). At this point, this is all still a tad speculative. REA has not made an official offer for the company nor put a potential price tag on what it might be willing to pay for it. It hasn't reportedly even entered discussions with Rightmove.

As we covered at the time, REA has 28 days under British law to make a final offer for Rightmove. So we might have to wait until 30 September to find out if REA is even serious about the acquisition.

Investors have already made their options clear though. On the day this news came out, the REA share price plunged 5.3% and has since shed another 3.1%.

Meanwhile, Rightmove's London-listed stock has soared 19.8% over the same period. So it's clear who the markets think is getting the better end of the deal if there is indeed a deal.

Saying all that, we can make a few speculations here.

A tale of two property stocks

If REA is indeed considering a full acquisition of Rightmove, it would be a blockbuster merger. REA currently has a market capitalisation of $26.56 billion, while Rightmove is being priced at 5.25 billion British Pounds ($10.25 billion). And if REA were to make a concrete offer for the company, it would likely come with an even higher price tag.

As such, a potential marriage could result in a ~$40-billion property behemoth on the ASX.

This property giant would represent the two largest property classifieds businesses across the United Kingdom and Australia under one roof. Comparing these two companies' financials directly is a little difficult since REA operates on a June-July financial year calendar, while Rightmove uses the traditional January-December format.

But even so, let's see what a combined company might look like.

What would supersized REA shares look like?

So over the 2023 calendar year, Rightmove reported revenues of 364.3 million pounds ($711.06 million), up 10% over the prior year. That resulted in an underlying profit of 264.6 million pounds ($516.46 million, up 8%).

In contrast, REA's recently filed earnings report for the 2024 financial year saw the ASX-listed stock reveal revenues of $1.45 billion, a 23% year-on-year increase. The company brought home $461 million in net profits.

As such, a combined entity could see a company with revenues of more than $2 billion and profits of close to $1 billion.

Interestingly, this comparison of both companies' profits highlights the valuation differences between the two. You'll notice that REA and Rightmove's profits are rather similar (although we are using slightly different metrics). The difference in valuation between the two companies is due to Rightmove trading on a price-to-earnings (P/E) ratio of 26.83, against a far more expensive 87.74 for REA.

We certainly have a mighty-large merger on our hands here. Let's see if it goes ahead.

The post What would REA shares look like with Rightmove under its roof? appeared first on The Motley Fool Australia.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market is expected to rise again on Tuesday despite a mixed start to the week in Europe. According to the latest SPI futures, the ASX 200 is poised to open the day 27 points or 0.35% higher. Wall Street was closed for the Labour Day holiday but in Europe the DAX was up 0.1%, the CAC rose 0.2%, and the FTSE fell 0.15%.

Buy REA Group shares

REA Group Ltd (ASX: REA) shares are in the buy zone according to analysts at Goldman Sachs. In response to news that it is contemplating an acquisition of UK peer Rightmove (LSE: RMV), the broker has retained its buy rating and $221 price target on the property listings company's shares. It notes: "Rightmove's multiple has declined from its 12mf EV/EBITDA peak of 30X during 2020 to 15x currently, below REA, which is trading on 28X; (2) Consensus REA/RMV EPS growth is broadly similar at 19% (REA) and 15% (RMV)."

Oil prices rebound

It could be a good session for ASX 200 energy shares Santos Ltd (ASX: STO) and Karoon Energy Ltd (ASX: KAR) after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 0.7% to US$74.04 a barrel and the Brent crude oil price is up 0.3% to US$76.48 a barrel. Traders appear to believe that recent selling has been overdone and are buying the dip.

Coles and Woolworths go ex-dividend

Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) shares are likely to trade lower this morning when the supermarket giants trade ex-dividend. Eligible Coles shareholders can now look forward to receiving its 32 cents per share fully franked dividend later this month on 25 September. Whereas Woolworths shareholder will be receiving their 97 cents per share dividend a few days later on 30 September.

Gold price rises

ASX 200 gold miners Gold Road Resources Ltd (ASX: GOR) and Regis Resources Limited (ASX: RRL) could have a good session on Tuesday after the gold price rose overnight. According to CNBC, the spot gold price is up 0.15% to US$2,531.7 an ounce. Rate cut optimism continues to give the precious metal a boost.

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

At the time of writing, the property listings company's shares are down 6.5% to $204.53.

Why is the REA Group share price sinking?

Investors have been hitting the sell button today in response to news that the company is looking at making a huge acquisition.

According to the release, the realestate.com.au operator has confirmed that it is considering a possible cash and share offer for London-listed Rightmove (LSE: RMV).

The release notes that REA has not approached, nor had any discussions with, Rightmove regarding any potential offer, but was forced to show its hand after its plans were leaked to the media.

The company's board believes that there are clear similarities between REA and Rightmove. It highlights their leading market positions in the core residential business, continued expansion and innovation of offerings across adjacent segments, leading audience shares, and strong brand awareness.

In addition, REA advised that it sees a transformational opportunity to apply its globally leading capabilities and expertise to enhance customer and consumer value across the combined portfolio and to create a global and diversified digital property company, with number one positions in Australia and the UK.

And while the REA share price performance today may say otherwise, the REA board believes the enlarged group would represent a highly attractive investment opportunity for sets of shareholders. This is because it would combine robust growth with strong margins and significant cash generation, enabling continued capital appreciation and shareholder returns.

For this reason, it "considers that a combination of the two businesses would provide a significant opportunity to unlock shareholder value."

What's this going to cost?

Firstly, it is worth highlighting that REA has warned that "there can be no certainty that an offer will be made, nor as to the terms on which any offer may be made."

As a result, "REA shareholders do not need to take any action at this time."

Based on UK takeover rules, REA has 28 days to announce a firm intention to make an offer for Rightmove or announce that it does not intend to make an offer. This means that it has until 30 September to make its move.

And while the company has not provided any confirmation of how much it would be willing to pay for Rightmove, it would undoubtedly be a significant sum.

On Friday, Rightmove shares closed at 557.37 British pence. This gave it a market capitalisation of GBP4.4 billion or approximately A$8.5 billion.

If we were to imagine that REA's potential offer is a 30% premium to its prevailing share price, this would imply an offer in the region of A$11 billion. This compares to REA's current market capitalisation of approximately A$28 billion.

The post REA Group share price sinks after $8.5 billion potential takeover target revealed appeared first on The Motley Fool Australia.