Shares of UK property portal OnTheMarket Plc rallied the most on record after US real estate firm CoStar Group Inc. agreed to take over the firm in a transaction valued at about £99 million ($120 million).
(Bloomberg) — Shares of UK property portal OnTheMarket Plc rallied the most on record after US real estate firm CoStar Group Inc. agreed to take over the firm in a transaction valued at about £99 million ($120 million).
Holders of OnTheMarket will get 110 pence per share in cash, representing a premium of 56% to the stock’s Oct. 18 closing price, according to a statement Thursday. The deal has the support of almost 30% of OnTheMarket’s share capital, it said.
CoStar — whose market value is more than $30 billion — is seeking to turn around OnTheMarket, which warned Thursday that a tough macro-economic backdrop may impact annual revenue.
OnTheMarket jumped as much as 53% in early London trading to 108 pence. The stock had slumped about 20% this year through mid-September.
Read more: Ex-Cantor Investor Takes Aim at OnTheMarket After Failed Offer
The deal follows a failed investment bid from Brett Stone, a former partner at US investment bank Cantor Fitzgerald LP, who penned a letter to OnTheMarket shareholders over the summer launching a scathing attack on the running of the business. Stone said the firm’s failure to retain customers is diluting stakeholders and gifting market share to rivals Rightmove Plc and Zoopla Ltd.
Rightmove shares slumped as much as 14% as Citigroup Inc. analyst Catherine T O’Neill said the deal would mean more intense competition.
When it comes to listings, Rightmove is about 50% larger than OnTheMarket, according to a Bloomberg Intelligence report published in May. The story is similar when looking at the amount of time a consumer spends on the website and the number of page views, the report added.
Read more: Rightmove Won’t Be Toppled Easily After Rival’s Takeover: React
OnTheMarket has attempted to dent Rightmove and Zoopla’s dominance by offering services to agents for reduced or zero fees on long contracts, as well as issuing them equity. However, the company’s share price has tumbled in the last 18 months, and website visits declined 14% year-on-year in 2022.
(Updates with offer price in the second paragraph and Rightmove slump in the sixth.)
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