Rupert Murdoch set to improve bid for Rightmove

An Australian property giant controlled by Rupert Murdoch is considering a higher offer for Rightmove, The Mail on Sunday can reveal.

Senior brass at Rea, where the media mogul owns a majority stake, are believed to be considering another offer after the property listings platform rejected a £5.6bn proposal last week.

Rightmove said Rea’s offer was “opportunistic” and “undervalued” the company.

Another offer could come as early as this week, sources close to the situation added, and Rea’s bankers at Deutsche Bank are keen to find a way to close the deal.

Analysts believe a bid of around £6bn is needed to win over Rightmove, which controls more than 80 per cent of the UK listings market.

Murdoch’s eldest son, Lachlan, orchestrated an investment in Melbourne-based Rea in 2001 as its shares plummeted following the bursting of the dotcom bubble.

Lachlan’s decision was shrewd, as Rea is now one of the largest companies on the Australian Stock Exchange, with a valuation of more than £13 billion.

The investment in Rea is seen as one of his most crucial contributions to the family’s sprawling empire, which includes the Sun and Times newspapers.

The purchase of Rightmove would cement Lachlan’s position as the media baron’s favourite son.

It would also provide a source of revenue to support the family’s struggling newspaper division in the UK. The company has taken similar steps in Australia and the US.

Rightmove’s offer comes amid a succession battle at Murdoch’s News Corp, with the 93-year-old media baron plotting to hand control to his eldest son, who has emerged as the likely successor ahead of his siblings James, Elisabeth and Prudence.

But a plot twist emerged last week after hedge fund Starboard Value lobbied to end Murdoch’s voting control at News Corp.

The measure points to the enormous weight of the family’s vote in the media group.

The Murdoch estate has come under renewed scrutiny in recent months as Rupert is reportedly seeking to change the family trust.

Rightmove is a prime target for Rea as the company’s shares have fallen after the UK property market was hit by higher mortgage rates.

The proposal rejected by Rightmove last week valued its shares at £7.05 each, down from their 2021 high of £7.95.

Rightmove shares closed at £6.70 on Friday, below the offer price, suggesting a higher bid may not materialise.

Analysts at broker Jefferies said: “It is clear that the outcome is still uncertain.”

A source close to the company said there were private equity firms on the horizon. The source said: “Private equity will come in, make cuts and sell. Rea is offering to invest, that’s the difference.”

Rightmove’s profits and shares are expected to rise as the property market recovers. Interest rates have been cut from a 16-year high of 5.25 per cent, with further reductions expected this year. House prices hit a two-year high last month as falling mortgage rates boosted buyer confidence, according to data from Halifax Bank.

Rea has until September 30 to announce his firm intention to submit an offer or withdraw.

The addition of Rightmove would create a financial cushion for British newspapers, but Lachlan’s ultimate loyalty to traditional media has always been in doubt. In recent years, Rupert Murdoch has been forced to restructure his empire in the face of global competitive pressure.

In 2017, Disney acquired his 21st Century Fox entertainment business for $71bn (£55bn), while a year later Murdoch was forced to give up control of Sky after being outbid by Comcast’s £30bn bid.

In the mid-1990s, the ever-astute Rupert quickly realised the devastating impact the Internet would ultimately have on the vast newspaper classifieds industry. The online real estate market is a natural environment for a newspaper business to strategically understand, albeit with limited operational synergies.

Douglas McCabe of Enders Analysis highlights the success enjoyed by the Daily Mail owner’s investment in Zoopla and the Guardian’s former ownership of AutoTrader.