“We strongly support the decision by the REA team to withdraw from the potential acquisition of Rightmove. We applaud REA’s financial discipline as it is foolhardy to overpay for an asset, even if it patently had positive potential.
Reminder: Rupert Murdoch’s NewsCorp is the majority owner of REA
Thomson doffs his cap to the media baron’s favoured son, who persuaded his father to take a stake in REA shortly after the turn of the century, saying:
Financial discipline has been at the heart of the transformation of News Corp and our recent successful acquisitions for Dow Jones and HarperCollins reflect that core principle. Thanks to Lachlan Murdoch’s savvy investment in REA, digital property has become an important engine of growth at News Corp.
We have no doubt that REA will continue to successfully expand into auspicious adjacencies and are excited by their progress in India, where the company is now the market leader and benefitting from the express economic growth in the world’s largest country.
He wraps up with a jibe at Rightmove’s board, saying:
As for Rightmove, we wish them well in an increasingly competitive British market – unfortunately, the company’s Board did not make the right move.”
Key events
Away from the aftermath of the Rightmove takeover battle, the chief executive of Tata Steel has said he is “deeply conscious” of how difficult the closure of the last blast furnace in Port Talbot is.
Tata started winding up operations at blast furnace number four at the Port Talbot plant today, ending traditional steelmaking in South Wales.
In a statement Rajesh Nair said:
“I am deeply conscious how difficult today is for everyone associated with our business.
“Throughout this transition we are doing everything possible to minimise the impact on all those who are affected by the changes we are making.
“Today marks a significant event in the history of iron and steelmaking in the UK as the legacy steelmaking assets in Port Talbot close, having reached their end of life.
“It is important at this juncture to pause, recognise and credit the huge contribution of the many thousands of people and the technologies that have sustained our industry and communities here for generations.”
Nair added that Tata Steel wants a “brighter, greener future” through a £1.25 billion investment in low-carbon scrap-based steelmaking.
Welsh Office minister DameNia Griffith has promised that the government will support steelworkers and their families, saying:
“We’ve got a year-long scheme where they can have their pay and be trained at the same time for other opportunities in the area.
“We’ve got a scheme helping those in the supply chain who would have been supplying Tata they can also get retraining.”
Hargreaves Lansdown: REA Group stops knocking on the door of Rightmove
“REA Group has given up knocking on the door of Rightmove, after the property portal refused to open up. It decided the offers were too low, given the opportunities for growth ahead. Rightmove’s unwillingness to engage with REA Group shows how far away the latest proposal is from what the board would have required to start a due diligence process.
It’s easy to see why REA Group was interested in Rightmove. It runs property websites and indices across Australia, Asia and North America, so getting a dominant foothold in the UK would have been very attractive.
Streeter adds that “there remains a glimmer of hope” that perhaps another suitor may step in with a higher offer, as REA walks away.
Sentiment around the property sector has been improving, with interest rate cuts eyed on the horizon and a house price revival in September. However, there are still risks ahead to the Rightmove model.
The number of estate agents is falling, as DIY alternatives grow in popularity and more estate agents look set to be forced out of business.
This could hamper the ability to cross-sell premium advertising packages. Right now though, today’s estate agents can ill-afford not to advertise on Rightmove. ‘’
Rightmove: We are an amazing business
Rightmove has now issued a statement to the City, saying its board is “confident’ in the company’s prospects.
It reiterates that it could not recommend REA’s proposed offer to shareholders, as they were “unattractive and materially undervalued Rightmove”.
Rightmove’s chair Andrew Fisher says:
“The Board of Rightmove is grateful to all of its shareholders who have engaged and shared views through this process.
Rightmove is an amazing business with a very strong team and a clear strategy. We are confident that we will deliver significant future value for shareholders.”
Rightmove gives five reasons for its confidence:
Rightmove’s business model has proven itself able to deliver strong outcomes in all operating environments
A clear strategy in place to deliver long term and profitable growth
Well positioned to drive innovation and digitisation through the entire property transaction chain, powered by unrivalled market data and insights
Together with the Core business [estate agency and new homes], Strategic Growth Areas [commercial property, rental services and mortgages] will deliver a higher-growth, more diversified business, and an even stronger platform
The Board is confident that Rightmove’s experienced and high-quality management team will continue to successfully drive the Group to create significant value for shareholders
“We strongly support the decision by the REA team to withdraw from the potential acquisition of Rightmove. We applaud REA’s financial discipline as it is foolhardy to overpay for an asset, even if it patently had positive potential.
Reminder: Rupert Murdoch’s NewsCorp is the majority owner of REA
Thomson doffs his cap to the media baron’s favoured son, who persuaded his father to take a stake in REA shortly after the turn of the century, saying:
Financial discipline has been at the heart of the transformation of News Corp and our recent successful acquisitions for Dow Jones and HarperCollins reflect that core principle. Thanks to Lachlan Murdoch’s savvy investment in REA, digital property has become an important engine of growth at News Corp.
We have no doubt that REA will continue to successfully expand into auspicious adjacencies and are excited by their progress in India, where the company is now the market leader and benefitting from the express economic growth in the world’s largest country.
He wraps up with a jibe at Rightmove’s board, saying:
As for Rightmove, we wish them well in an increasingly competitive British market – unfortunately, the company’s Board did not make the right move.”
Analysts at JP Morgan Cazanove said this morning that they had held discussions with “a range of investors” in the UK, Continental Europe and the US. The feeling was that REA would have to pay at least a 50% premium to Rightmove’s share price before REA’s first offer.
That would mean an offer at at least 800p per share, with some investors suggesting 850p, they said – REA’s fourth and final bid was only worth 780p.
Chart: Rightmove’s shares drop to one-month low, but….
This chart shows how Rightmove’s shares have fallen to a one-month low today, as its spurned Australian suiter walks away.
But as you’ll see, they’re still over 10% higher than before REAGroup made its first approach.
REA has been critical of Rightmove’s share price performance in recent years, saying today:
Rightmove’s share price has lacked any sustained upward momentum for two years despite being supported by its ongoing share buyback programme and revised strategy announced at last year’s Capital Markets Day.
Rightmove’s board will now have to prove to shareholders that it was right to rebuff REA, and deliver on its claim that the company has strong “standalone prospects”.
REA concedes defeat in takeover battle for Rightmove
Newsflash: Australia’s REAGroup has abandoned its efforts to take control of Rightmove.
After seeing its fourth offer rebutted this morning, REA has now conceded defeat and walked away from its pursuit of the UK property portal.
In a statement to the City, REA – backed by Rupert Murdoch’s News Corp – says it will not make an firm bid for Rightmove.
REA had to make a decision on whether to bid, or walk away, by 5pm today.
Owen Wilson, CEO of REA, insists that the deal would have benefitted both company’s shareholders.
And he again criticises Rightmove for not fully engaging with REA, saying:
“Against a backdrop of intensifying global competition, we approached Rightmove’s Board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders. We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available. They had nothing to lose by engaging with us.
“We are always financially disciplined when we look at M&A and reinvestment in our business and will continue to focus on the many other opportunities ahead of us. Our recent investment in Athena Home Loans is a great example of this. We have a clear strategy to expand in our core business and adjacent markets, and India represents an exceptional opportunity for growth. We look forward to pursuing these opportunities and generating further value for REA shareholders.”
As we covered this morning, Rightmove rejected REA’s fourth offer, worth £6.2bn, before the stock market opened. It said the latest proposal “remains unattractive and continues to materially undervalue Rightmove”.
Rightmove shares suddenly drop as PUSU deadline nears
Rightmove shares have suddenly extended their earlier losses, and are now down 7.5% at 620p.
That’s down from 668p on Friday night, and taking them further away from REA Group’s now-rejected offer of 780p.
There’s now just five hours until the Put Up Or Shut Up deadline for a firm bid is hit.
The City might be anticipating that REA will be forced to to walk away at 5pm, rather than come up with a bid that is lucrative enough to attract Rightmove.
Jack Simpson
There’s more turmoil in Europe’s car sector today, with two manufacturers issuing profits warnings.
Stellantis, the owner of Vauxhall, Fiat and Peugeot, blamed a hit to sales from a deterioration in the global automotive market and increased competition from Chinese rivals.
Stellantis shares plunged by up to 14% after it said it now expected profit margins to be between 5.5% and 7% for the year, down from the previous forecast of double-digit growth.
The British luxury car manufacturer AstonMartin also issued a profit warning on Monday, blaming the softening Chinese market as well as widespread supply chain issues for the drop.
It comes after rival carmakers BMW, Mercedes and Volkswagen all said in the last month they would also face lower profits this year, citing weaker demand.
In its update, Stellantis said:
“Deterioration in the global industry backdrop reflects a lower 2024 market forecast than at the beginning of the period, while competitive dynamics have intensified due to both rising industry supply, as well as increased Chinese competition.”
The closure means the UK – the home of the Industrial Revolution – becomes the first in the global club of wealthy countries to quit coal – relying instead on natural gas, nuclear power and a combination of renewable energy sources.
In 1963, the Guardian told its readers about the proposed plant’s approval by the then minister of power, RichardWood.
His decision would have delighted the Central Electricity Generating Board, but the planned construction of the plant on several hundred hectares of land was described by the Council For The Preservation of Rural England as “an invasion into what is scenically and recreationally, the best part of the Nottingham green belt”.
Its deputy secretary, M VOsmond, was also quoted by the Guardian as saying:
“It is no use designating green belts unless you are prepared to keep them intact”
The report commission by the Government on which it based its decision to give the plant the go ahead felt it had address the concerns of those fearing the loss of green spaces as well as the plant being a perceived blot on the landscape, by saying that the most unattractive part of the power station would be partly screened by low hills, and could be screened further by planting.
On concerns about the plant causing air pollution, the report said the power station would not cause an “appreciable hazzard” to the health of the people living in the area.
Construction of Ratcliffe-on-Soar began in 1963 and it was completed in 1967. The station began generating power on 31 January 1968.
Frasers makes £83m takeover offer for Mulberry
Sarah Butler
It’s handbags at dawn! Mike Ashley’s Frasers Group has filed a takeover offer for Mulberry as it expressed concerns about the future of the British handbag maker.
Frasers, which already owns a 37% stake in Mulberry, said it was making an ‘possible offer’ for the whole of the company after the brand announced an emergency £10.75m placing of shares to prop up the balance sheet late on Friday.
The offer is worth 130p per Mulberry share, valuing Mulberry at £83m.
Mulberry said it needed to raise cash after it fell to a £34m pre-tax loss in the year to the end of March, from a £13m profit a year before, after sales dropped by 4% to £153m. It added that sales were down 18% for the 25 weeks since the period end.
In a statement issued on Monday, Frasers said it “will not accept another Debenhams situation where a perfectly viable business is run into administration.”
The statement refers to collapse of the department store in 2019, wiping out shareholders including Ashley’s retail group which had ploughed £150m into the business including building up a near 30% stake.
It said it “was not aware of the [planned cash raising by Mulberry] until immediately prior to its announcement.” and would have been willing to underwrite it on better terms than those announced.
Mulberry’s share price, which stood at 125p on Friday before the announcement, recovered to 120p from 100p on Monday.
Rightmove takeover: What the experts say
As the time ticks down to REAGroup’s 5pm deadline to make any more bids for Rightmove, City analysts are awaiting its next move:
Richard Hunter, head of markets at InteractiveInvestors, says:
In the premier index Rightmove shares declined by around 4% after rebuffing the latest approach from REA Group of Australia ahead of today’s deadline, which has thrown considerable doubt over whether this deal will progress at all, particularly given the board’s apparent reticence even to engage with the suitor.
AJ Bell investment director Russ Mould suggests the takeover battle could leave Rightmove in a ‘better position’ than it started, even if REA walks away:
“We’re into the final stretch in the race to buy Rightmove. REA has until 5pm today to make a formal offer, and it’s going to have to radically change the price and structure of the deal if it has any chance of winning over Rightmove’s board.
“Given that four proposals have been rejected, one would have thought REA had got the message by now that Rightmove shareholders want a whole lot more money. Normally by this point in the proceedings the suitor would accept defeat and retreat with its tail between its legs. Yet REA has shown a dogged determination to secure the prize so you cannot rule out one final attempt before the clock strikes five.
“A 3% decline in the share price in early trading on Monday implies some investors are banking profits while the stock remains elevated by the live bid situation. It also suggests that the market doesn’t believe REA will come back with anything good enough to win the deal, given how the price is trading below the latest rejected offer level.
“Rightmove could come out of this situation in a better position than pre-bid. The fierce takeover interest will have reminded the market there is something special about this company and that could draw in a new pool of investors.”
UK mortgage approvals hit two-year high
UK mortgage approvals have hit their highest level in two years, in another sign that demand in the property market is picking up.
New data from the Bank of England shows that 64,900 mortgages were approved in August, up from 62,500 in July.
That’s the highest level since August 2022, the month before the mini-budget rocked the markets and pushed up mortgage rates.
Mortgage approvals rose despite the ‘effective’ interest rate on newly drawn mortgages inching up to 4.84% in August, up from 4.81% in July.
Jonathan Samuels, CEOof property lender Octane Capital, says:
“Mortgage approval levels have continued to climb for the third consecutive month which signals that buyers are returning to the market at mass in order to make their move this side of Christmas.
We haven’t quite seen the reduction in mortgage rates that you might expect following August’s base rate reduction, however, it remains very early days and what we have seen is a significant cut to rates across all lending segments when compared to this time last year.
Approvals for remortgaging (which only capture remortgaging with a different lender) ended a five-month slump, by rising from 25,200 in July to 27,200 in August.
There was also a small increase in consumer borrowing last month, the BoE reports; net borrowing of consumer credit by individuals hit £1.3bn in August, a slight increase from £1.2bn in July.
China’s market posts best day since 2008
China’s stock market has just posted its biggest one-day jump since the financial crisis 16 years ago.
The CSI300 index, which tracks the 300 largest companies on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, has soared by 8.5% today, as the rally which began last week rumbles on.
That’s its biggest one-day jump since September 2008, helping the CSI 300 record its best month in almost a decade.
Mainland Chinese markets are now closed for the rest of the week for the country’s Golden Week celebrations.
Shares in property stocks jumped today, after several major cities in mainland China unveiled easing measures to boost homebuying.
Guangzhou city announced the same day the lifting of all restrictions on home purchases, while Shanghai and Shenzhen eased curbs on buying. China’s central bank said on Sunday it would tell banks to lower mortgage rates for existing home loans before the end of October.
Investors have been piling into Chinese stocks after Beijing launched a series of stimulus measures last week, including cuts to interest rates and fresh support for the property sector.
For the month, the CSI 300 index had gained almost 21%, its best performance since December 2014.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, says:
Chinese stocks have held onto their rally, as hopes that the big stimulus whammy from the central bank, will help revitalise the economy. The People’s Bank of China has added another bit of punch to the package of measures aimed at curing the property market’s malaise. It’s now ordering banks to reduce mortgage rates for existing home loans, in addition to the other lending measures put in place last week.
The latest manufacturing snapshot shows why the authorities have stepped up efforts to encourage investment. The Caixin China manufacturing PMI dropped to 49.3 in September, with anything under 50 flagging a contraction. The downturn in new orders shows just how difficult it’s been for factory owners, amid such weak demand.
UK house prices: What the experts say
The rise in UK house prices this month is a sign that the squeeze on households is slowly easing, says MattSwannell, chief economic advisor to the EYITEMClub:
“Today’s Nationwide house price data showed house prices increase by 0.7% m/m in September, beating the Bloomberg consensus. However, from month-to-month, house price data can be volatile. Looking over the last 12 months, house price growth picked up to 3.2% in September, from 2.4% in August.
“Although somewhat modest by historical standards, September saw Nationwide’s house price gauge running at its highest rate since the end of 2022. From here, the EY ITEM club expects a further, if gradual, increase in house prices. Further cuts in Bank Rate across the end of this year and through next year will ease mortgage rates, lifting housing market activity. But, set against that, housing valuations remain quite stretched.
“Overall, the UK’s economic recovery looks to be well set. Together with falling inflation, a recovering housing market has improved consumer confidence. Nonetheless, we expect the Bank of England to cut Bank Rate by 25bp in November as it slowly gains confidence that inflation persistence is fading.”
North London estate agent JeremyLeaf reports that demand has picked up:
“The market has changed and demand is improving which has coincided with lower mortgage rates and a more settled picture for inflation and politics.
“This shift has resulted in more appraisals, listings, offers and firming pricing. But with choice of properties and mortgages rising, a fear of missing out is also prevailing. Uncertainty remains an obstacle, particularly at the higher end, probably at least until after the Budget at the end of October.”
EmmaFildes, founder of the buying agency BrickWeaver, points out that average prices are now around 2% below their peak two summers ago:
But…Tom Bill, head of UK residential research at Knight Frank, cautions that the mood has recently turned ‘more cautious’ in the housing market:
“Falling mortgage rates led to an increase in house price growth in September, with demand also boosted by buyers putting off decisions until after the election. However, the mood has since turned more cautious ahead of the Budget following suggestions by the government it will be painful.
We think prices will end the year a few percent higher but sellers should be aware that buyer exuberance will be in short supply in the final months of the year.”
REA Group’s dominance of the Australian real estate market has been blamed for. Australians paying the most expensive advertising fees in the world to sell their homes online.
The cost has risen to as much as $4,000 (£2,070) for an inner-city listing.
My colleague SarahMartin explained earlier this month:
The dominance of the News Corp-controlled realestate.com.au has prompted more than a dozen complaints to Australia’s competition watchdog, the Australian Consumer and Competition Commission, over the past decade from agents and industry disruptors, Guardian Australia can reveal.
REA Group is now a $27bn company and posted a net annual profit of $460.5m in August, driven by a 23% increase in revenues to $1.5bn.
This was partly due to average price hikes of 13% in the past year.
In contrast, Rightmove brought in £1,431 in average revenue per advertiser per month in 2023, according to its annual report, to cover all their listings on the site.
That allows Rightmove to achieve profit margins of 70%.
Shares in Rightmove have dropped in early trading, after the company rebuffed REA Group’s latest offer.
They’re down almost 3% at 649p, further away from REA’s cash and shares proposal which was worth 780p.