Rightmove PLC's (LSE:RMV) rejected £5.6 billion bid from Rupert Murdoch's REA Group had a higher proportion of cash than expected, analysts said, but still suggested the Australian company would have to up its offer some way to be successful.
REA stated the offer equated to 705p per Rightmove share, with 305p in cash and 0.0381 of a new REA share per Rightmove share, or 698p if based on the lower REA price recently.
Analysts at Jefferies said this was more than the 230p of cash per share it forecast, but was at the bottom of the 700-750p range it predicted.
Rightmove announced on Wednesday that it had rejected the offer was “wholly opportunistic and fundamentally undervalued” the business.
The offer value represented a 26% premium to Rightmove’s closing price on 30 August when REA first showed interest.
“Clearly there is no certainty of outcome as yet,” the Jefferies analysts said, speculating that it “is possible that the REA press release has been made to encourage Rightmove's board to accept a revised offer.
“One normal course of events would be for a revised offer to be made in due course.”
And the language used in Rightmove’s statement "implies it isn’t an outright ‘no at any price’," said Russ Mould, head of investment at AJ Bell, based on the property portal saying it "carefully considered" the proposal.
"That phrase suggests it is simply ‘no at the current proposed price’ and that the situation might change if REA digs deeper."
But he said a 27% bid premium "was never going to be taken seriously" by either Rightmove or its shareholders.
"Now comes the interesting part where we see if REA is serious in its pursuit for Rightmove, or whether it was simply trying its luck at a bargain price," said Mould, noting that the UK company has two key characteristics which might command a larger premium, being the UK market leader and its "unique" status on the London Stock Exchange.
Rightmove shares ticked up 0.4% to 673.6p on Wednesday.