OnTheMarket agrees £99m takeover as it takes fight to Rightmove
- Rightmove shares fell over 12% following the update by OnTheMarket
- OnTheMarket shares rose over 50% following its deal announcement
OnTheMarket shares surged by more than half on Thursday after the group revealed it had agreed to be taken over by US commercial real estate information group CoStar in a £99million deal.
OnTheMarket shares were up 52.51 per cent or 37.02p to 107.52p on Thursday afternoon on the back of the 110p per share offer - a 56 per cent premium to Wednesday’s closing price.
But rival Rightmove saw its shares fall by more than 12 per cent in response to the deal, following warnings from analysts at Citi who said the move could spell bad news for the UK market leader.
Deal: OnTheMarket shares surged on Thursday, while Rightmove shares suffered
Citi analysts said that CoStar had firepower, namely $450million to $500million free cash flow per year, meaning Rightmove could face greater competition in residential and other areas.
CoStar, a heavyweight in the world of commercial property, said it believed the deal represented an 'attractive strategic entry point' into the UK residential property market. OnTheMarket hopes the deal will 'accelerate' its transformation.
The takeover is backed by 29.5 per cent of the group's share capital, including its six biggest shareholders.
CoStar has made a number of acquisitions in recent years, including a $156million takeover of the residential real estate website Homes.com back in 2021.
Jason Tebb, chief executive of OnTheMarket, said: 'From a position of strength, partnering with CoStar will significantly accelerate our strategy with the clear target of becoming the market leader, whilst staying 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 agents who we believe will benefit from unparalleled value and greater opportunities to enhance their businesses.'
Chris Bell, chairman of OnTheMarket, said: 'The offer from CoStar recognises the quality of OnTheMarket and the significant potential of the business, while offering shareholders an attractive opportunity to realise their investment at a substantial premium to the prevailing share price.'
Andy Florance, founder and chief executive of CoStar, said: 'We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar into the estimated £8trillion United Kingdom residential property market.'
A turbulent period for the property sector saw online-based estate agency Purplebricks sold for £1 to rival Strike earlier this year.
