Rightmove & REA Group: Will REA come back for Rightmove? We‘re running the numbers again... and we can‘t get overly excited.

Research evidence excerpt

Rightmove & REA Group: Will REA come back for Rightmove? We‘re running the numbers again... and we can‘t get overly excited.

ssed valuations. While we see limited

Telecommunications

appetite from financial sponsors at this stage (see below), REA may revisit the

strategic rationale for owning Rightmove. Our base-case LBO framework Bob Chen AC

highlighted in this note assumes News Corp (REA’s 62% shareholder) is unlikely to (61-2) 9003-8611

bob.chen@jpmorgan.com

accept dilution <50% (while a fully debt-financed structure is not feasible), and under J.P. Morgan Securities Australia Limited

a 65%/35% debt/equity funding mix, 45% premium (a multiple similar to last 3y avg) Benjamin Jones

and ~3x leverage (vs. net cash today), we estimate only c. 4% EPS accretion—an (61-2) 9003-8627

outcome we do not view as sufficiently attractive from a risk/reward profile. benjamin.s.jones@jpmorgan.com

J.P. Morgan Securities Australia Limited

• The proposed REA/Rightmove combination ultimately did not proceed—

but will REA return given the sharp de-rating across the space? In Specialist Sales contact details:

September 2024, REA announced its intention to acquire Rightmove to “build Scott Silver - Specialist Sales -

a global digital property leader by combining two market-leading portals European TMT

(Australia and the UK) with strong brands, leading audience share and (44-20) 7134-0412

broadly aligned cultures” and REA also argued it could “leverage its product scott.silver@jpmorgan.com

and operating capabilities to accelerate innovation, enhance customer value

and support attractive shareholder returns through sustained growth, margin

expansion and cash generation”. At the time, a number of investors

highlighted the potential to also introduce REA’s seller-led model also in the