Following the announcement of the planned departure of Nine Entertainment boss Mike Sneesby last week, attention is now turning to the online real estate spin-off Domain – and whether Jason Pellegrino may also be about to depart.
Mr Pellegrino has run Domain since 2018 after heading Google’s Australia and New Zealand operations, and there’s some chatter that after several years at the helm, his time may be up.
It is understood that Nine has been giving considerable attention to the future of Domain, which is the second-largest player in the sector behind REA Group, which is majority-owned by News Corp, publisher of The Australian.
Nine – a publisher, broadcaster and digital media business – is understood to be weighing a move to privatise Domain with help from private equity, a possibility being thought through by its adviser Michael Stock at Jefferies Australia.
Taking it off the listed market could boost performance behind closed doors, without scrutiny.
While REA’s market value is about $27bn, Domain’s is only $1.8bn.
Domain shares were about $3.44 four years ago and are now $2.80. They peaked in 2021 at over $5.
In its latest results for the year to June, Domain reported a 13.1 per cent increase in revenue for the past financial year to $391.1m, while net profit increased by 27.9 per cent, excluding significant items, to $49.4m.
Meanwhile, analysts at Citi say they believe REA should pay no more than a 40 per cent premium for its British peer Rightmove, after a $11bn offer was rejected. “The accretion maths getting a bit tougher with the slide in REA’s share price,” they said.
Based on the current share price, earnings-per-share accretion would be 14 per cent, based on a 30 per cent takeover premium, and 11 per cent at a 40 per cent premium, assuming 5 per cent cost synergies.
“Based on this analysis, we believe REA should look at a 40 per cent premium as the max.”
This implies a price of 22 times earnings for Rightmove. A higher offer would be funded through an equity raising.
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