Rightmove PLC (LSE:RMV) directors have rejected a 698p per share takeover offer from Rupert Murdoch's REA Group.
Australia-based REA, which revealed last week that it was considering an offer, proposed a deal involving 305p of cash and 0.0381 new shares for each Rightmove share, totalling 698p per share.
The offer, if based on REA's closing price of A$205.51 when the offer was made on 5 September, implies a total offer value of 705p per share and values Rightmove at £5.6 billion, with the UK company's shareholders owning around 18.6% of the combined group shares following the deal.
REA said it would apply for a secondary listing in London if the takeover were to take place.
The FTSE 100 company's board concluded this was "wholly opportunistic and fundamentally undervalued Rightmove and its future prospects".
It said in a statement this morning that the offer was unanimously rejected on Tuesday.
REA, where the Murdoch family's News Corp (NASDAQ:NWSA) owns a 61% stake, has a put-up-or-shut-up deadline of 5pm on 30 September to come back with a firm bid or walk away.
The Aussie company noted that its offer was at a 27% premium to Rightmove's share price of 556p at the end of August, before it announced its interest the week after and a 31% premium to the average over 12 months and 20.5 times.
It said the offer price is also at a multiple of 20.5 times Rightmove's underlying earnings (EBITDA) for the year to June 2024 of £272 million.
"The 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," REA said in a statement.
It said the deal would create a "global and diversified digital property company, with strong margins and significant cash generation", while also enhancing shareholder value, would leverage REA's "experience in investing in and growing adjacencies to support Rightmove in its ambition to accelerate expansion in these areas", and would enhance the UK property market experience for buyers, sellers, and renters.
Rightmove shares fell in initial deals on Wednesday before quickly rising almost 1% to 676.6p.
** Update: Adds detail, share price **