Property portal OnTheMarket surges 53% on US$120 million takeover by CoStar

SHARES of UK property portal OnTheMarket rallied the most on record after US real estate firm CoStar Group agreed to take over the firm in a transaction valued at about US$120 million.

Holders of OnTheMarket will get 110 pence (S1.83) per share in cash, representing a premium of 56 per cent to the stock’s Oct 18 closing price, according to a statement on Thursday (Oct 19). The deal has the support of almost 30 per cent of OnTheMarket’s share capital, it said.

CoStar – whose market value is more than US$30 billion – is seeking to turn around OnTheMarket, which warned on Thursday that a tough macro-economic backdrop may impact annual revenue.

OnTheMarket jumped as much as 53 per cent in early London trading to 108 pence. The stock had slumped about 20 per cent this year through mid-September.

The deal follows a failed investment bid from Brett Stone, a former partner at US investment bank Cantor Fitzgerald, who penned a letter to OnTheMarket shareholders over the summer launching a scathing attack on the running of the business. Stone said the firm’s failure to retain customers is diluting stakeholders and gifting market share to rivals Rightmove and Zoopla.

Rightmove shares slumped as much as 14 per cent as Citigroup analyst Catherine T O’Neill said the deal would mean more intense competition.

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When it comes to listings, Rightmove is about 50 per cent larger than OnTheMarket, according to a Bloomberg Intelligence report published in May. The story is similar when looking at the amount of time a consumer spends on the website and the number of page views, the report added.

OnTheMarket has attempted to dent Rightmove and Zoopla’s dominance by offering services to agents for reduced or zero fees on long contracts, as well as issuing them equity. However, the company’s share price has tumbled in the last 18 months, and website visits declined 14 per cent year-on-year in 2022. BLOOMBERG