Domain takeover to crack open a new stage for Nine

US digital real estate listings giant CoStar is edging closer to its prize as its $2.8 billion “best and final offer” for Domain Group remains on track to hit its mark.

The deal, if completed, would deliver a seismic shift to the Australian media industry. CoStar’s revised offer comes after a week of constructive meetings between Nine’s top executives and Andrew Florence, the boss of CoStar.

Florence, who left Australia last night, was pictured arriving at a party at former Liberal Treasurer and US ambassador Joe Hockey’s house in Sydney’s northern suburbs on Sunday, which was also attended by Nine CEO Matt Stanton and other business and politics figures.

CoStar’s Andrew Florence arrives at former Liberal Treasurer Joe Hockey’s house on Sunday for a party also attended by Nine boss Matt Stanton.Credit: Oscar Colman

It was the first of several meetings between the pair this week. CoStar’s revised offer of $4.43 per share landed shortly after he returned to the United States. Nine, the owner of The Sydney Morning Herald, Age and The Australian Financial Review, has a 60 per cent stake in Domain.

Having fielded CoStar’s initial offer of $4.20 per share, Nine’s bankers had suggested a price of $4.65 to the US suitor. CoStar’s new offer has landed in the sweet spot for Nine, which told the market it supported Domain’s decision to open its books to the US firm.

The revised deal represents a 42 per cent premium on Domain’s closing share price on February 20, before the opening bid landed, and a 5.5 per cent rise on the previous offer. Domain’s share price, which closed at $4.47 on Wednesday, took a tumble on the back of the latest news on Thursday, closing 4.9 per cent weaker at $4.25.

Nine’s shares slipped 1.6 per cent at $1.56.

CoStar said its latest proposal was the best and final price it was willing to offer, in the absence of a competing proposal, which has yet to materialise. Domain said its board had unanimously decided to engage with the suitor, but warned there was no guarantee that a deal would be agreed on.

Should both parties come to an agreement, the sale of Domain would reshape the media market in Australia and leave Nine a vastly smaller entity. Nine’s stake in the real estate portal makes up more than half of its market capitalisation.

A successful deal would also be a win for Nine shareholders, with the infusion of close to $1.7 billion into Nine’s balance sheet setting up the prospect of a juicy dividend. The cash could also be reinvested into Nine’s growth areas, such as publishing and streaming service Stan, sources with knowledge of the company’s ongoing thinking, who are not authorised to speak publicly, said.

Nine has already strengthened its relationship with American media firm Warner Bros. Discovery, acting as the sales representative for its streaming service Max, which will be launched in Australia this week and will serve as the home of popular HBO shows such as The White Lotus, The Last of Us and House of the Dragon.

Parting ways with Domain would come just as Nine has sought greater control over the company, prompted by the exit of former chair Peter Costello, who resigned in mid-2024. Domain suffered from an at-times difficult relationship between Costello and Domain chair Nick Falloon.

In 2024, both Stanton and Nine director Mickie Rosen joined Domain’s board, while Peter Tonagh, an experienced media executive and former ABC deputy chair, also joined Nine and Domain’s board this year.

Domain is being led by Greg Ellis on an interim basis after CEO Jason Pellegrino stood down in October. During his tenure, Domain lost significant ground to News Corp-controlled REA Group, which has emerged as the dominant property portal in the Australian market. Ellis is a former CEO of REA, running that company from 2008 to 2014.

A deal at the revised price would deliver Nine cash proceeds of about $1.4 billion net of capital gains tax, it said.

]The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.