OnTheMarket agrees £99m takeover as it battles Rightmove
- Rightmove shares fell over 12% after OnTheMarket update
- OnTheMarket shares rose over 50% following deal announcement
Shares in OnTheMarket rose by more than half on Thursday after the group said it had agreed to be taken over by US commercial property information group CoStar in a £99m deal.
Shares in OnTheMarket rose 53.19 per cent, or 37.50 pence, to 108.00 pence in early trading on the 110 pence per share offer – a 56 per cent premium to Wednesday’s closing price.
But rival Rightmove saw its shares fall more than 10 percent in response to the deal, after analysts at Citi warned the move could spell bad news for the British market leader.
Deal: OnTheMarket shares rose sharply on Thursday, while Rightmove shares suffered
Citi analysts said CoStar has firepower, with free cash flow of $450 million to $500 million a year, meaning Rightmove could face greater competition in residential and other areas.
CoStar, a heavyweight in the commercial property world, said it believes the deal represents an “attractive strategic entry point” into the UK residential property market. OnTheMarket hopes the deal will “accelerate” its transformation.
The acquisition represents 29.5 percent of the group’s share capital, including its six largest shareholders.
CoStar has made a number of acquisitions in recent years, including its $156 million purchase of residential real estate website Homes.com in 2021.
Jason Tebb, CEO of OnTheMarket, said: “From a position of strength, partnering with CoStar will significantly accelerate our strategy with the clear goal of becoming a market leader while remaining committed to fair and sustainable pricing.”
“CoStar will bring industry-leading global expertise and significant financial firepower to invest in OnTheMarket, allowing us to accelerate our transformation of the sector.”
“We have strong shared values in our commitment to brokers who we believe will benefit from unparalleled value and greater opportunities to grow their business.”
Chris Bell, chairman of OnTheMarket, said: “CoStar’s offer recognizes OnTheMarket’s quality and the company’s significant potential, while providing shareholders with an attractive opportunity to realize their investment at a significant premium to the current share price.”
Andy Florance, founder and CEO of CoStar, said: “We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar into the estimated £8 trillion UK residential property market.”
At a turbulent time for the property sector, online estate agency Purplebricks was sold to rival Strike for £1 earlier this year.