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Potential Rightmove takeover "indicates investor enthusiasm" for UK market

Journalist: John Choong (Head of Markets and Research), Newspage

ended 02. September 2024

Rightmove shares are up 20% today on the back of a statement released by REA Group stating its intent to bid for the property listing website. The group believes the synergies between its current business and Rightmove's will be a “transformational opportunity".

Jessica Pok, analyst at Peel Hunt, says falling interest rates could support the housing market, which would mean more business for Rightmove:

"It does not come as a surprise to us today that Rightmove has become an acquisition target, given the rating has been subdued for some time due to the negative sentiment on the UK housing market and concerns over competitive threats from CoStar/OnTheMarket.

However, our belief, reflected by the takeover interest, is that the shares look attractive, given the stability of its core classifieds business and the growth opportunities in other revenue streams such as Mortgages, Commercial RE and Rental under the new CEO. On top of that, with declining rates, we believe the UK property market has scope for improvement as we move into 2025.

Pok has a price target for Rightmove of 630p, which was a healthy premium on last week’s levels around 550p – before this morning’s jump higher."

Newspage asked analysts, brokers, and experts for their views of what this means for the future of the property market, Rightmove stock, and the UK stock market.

5 responses from the Newspage community

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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Rightmove, despite the efforts of it's competitors, is still by far the leading property portal and the first port of call for any prospective home buyers or movers and for many who just want to be nosey.

With increased fees and healthy revenue growth on mortgage and other referrals, it is no surprise that the property portal platform is turning heads of potential buyers or investors.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
The UK market is a sleeping giant, ready to awaken with newfound vigour, and the potential acquisition of Rightmove indicates investor enthusiasm for the market is growing. There has been a steady trend of foreign acquisitions of UK companies in 2024, which reached £6.1bn in Q1, and this is likely to be just the beginning.

As the UK economy stabilises, the confluence of improving macroeconomic conditions and an equity market starkly contrasting to the US, where valuations remain elevated, the UK is positioned to become a prime destination for international capital.

While the acquisition is not without its challenges, and CMA approval is not a foregone conclusion, if the deal can demonstrate clear consumer benefits, it stands a good chance of passing regulatory muster. Consequently, this could begin a new dawn breaking over the UK investment landscape, with foreign investors casting their nets into the market, hoping to catch a bounty of undervalued opportunities.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Rightmove shares have seen a significant surge of 20% today, fuelled by the exciting news of REA Group's planned acquisition. This strategic move positions Rightmove for transformative growth, leveraging strengths between the two companies. As interest rates continue to decrease, the property market is poised for a positive upswing, making this acquisition even more timely and strategic.
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Ben Perks
Managing Director at Orchard Financial Advisers
If a Murdoch-backed company is looking to invest nearly £5bn into a UK property platform, it is a clear sign that more bouyant times are on the horizon.

Whatever your opinion is of Murdoch, he certainly knows how to make a few quid. REA Group operate across 3 continents, so he knows a thing or two about property markets internationally, so, it's encouraging that they are eyeing up UK opportunities.
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John Choong
Head of Equities and Markets at Interpretiv
REA's bid for Rightmove is yet another bold example that UK PLCs are trading at tremendous value. With Rightmove owning over 80% of the property-listing market in the UK, this potential takeover is a no-brainer for REA.

However, potential traders and investors chasing quick gains should beware. After a 20% surge in Rightmove's share price to 670p, it's now comfortably above the 620p most analysts call fair value. Plus, the official bid isn’t even on the table yet, and CMA approval is still in the air. As such, any hiccups in the takeover process could send the stock tumbling down.

Nonetheless, this shows big money’s strong belief in the UK property market's unstoppable demand and long-term growth potential, especially with interest rates expected to decline in the coming months.