Short-sellers on Thursday were foretelling where REA Group’s $11bn-plus play for British rival Rightmove might be heading.
Shares in REA Group closed 3 per cent higher at $198.31 in a move high believed to be triggered by short-sellers looking to cover their positions.
Based on this, it suggests that they think its offer for Rightmove won’t be going any higher after REA was rebuffed for the third time.
REA, 61 per cent owned by News Corp, publisher of The Australian, is one of the most shorted stocks on the ASX with 3 per cent of shares held by short-sellers.
It was earlier expected that REA, keen to capitalise on its strong share price, would bid aggressively for Rightmove – sweetening the deal by as much as 20c a share.
Its latest offer of cash and scrip at the weekend was 770p per share, valuing the target at about $11.95bn (£6.1bn), which Rightmove’s board has now rejected.
Earlier, an offer of 749p a share was rejected, as was its original offer on September 5 at 705p per share. The dilemma is that shareholders get diluted with a raise, likely needed to increase the cash part of the offer further, or offering more of its shares.
Analysts at Citi say the UK real estate market agency market is quite competitive compared to Australia, with average real estate agent commissions at about 1 per cent in the UK and they have been under pressure.
In the UK, agents pay the advertising fees rather than the property vendors as is the case in Australia.
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