News Corp’s (NWSA, NWS) online real estate subsidiary REA Group Ltd. (ASX:REA) is expanding its presence in Southeast Asia with the launch of a A$750 (USD$ 536 million) million takeover bid for its rival iProperty Group Ltd. (ASX:IPP). REA currently holds a 22.7% stake in Malaysian rich-lister Patrick Grove’s iProperty.
REA is offering iProperty shareholders a cash consideration of A$4.00 per share, for the remainder of the shares it doesn’t already own. As an alternative, iProperty shareholders will also be able to elect Mixed Consideration comprising of A$1.20 in cash and 0.7 shares in a newly formed, unlisted public company, which will own an indirect interest in iProperty. The target company’s board of directors has recommended the deal to its shareholders.
REA will fund the acquisition primarily from new debt facilities totaling A$480 million, with the remainder from existing cash reserves. The acquisition is expected to be completed during the first-quarter of 2016 subject to customary conditions.
REA Group said Southeast Asia had strong population and gross domestic product growth and the real estate market was expected to continue to grow as buyers and sellers move to online advertising.
“The acquisition of iProperty is the logical extension of REA’s market leading business in Australia and marks the next step in its strategy to pursue strategically sound expansion into attractive markets,” said REA Group CEO Tracey Fellows. She said iProperty would provide the group with exposure to new geographies as it continued to expand into Asia and beyond.
“The deal will boost the wealth of BRW Young Rich member Mr. Grove, who controls 17 per cent of iProperty through his Catcha Media Group,” said the Sydney Morning Herald. “The Catcha stake is worth $128 million at REA’s bid price. Mr. Grove has established a swathe of Asian focused web companies including video streaming site iFlix and car sales portal iCar Asia. The 40-year-old was ranked 10th on the most recent Young Rich list with wealth of $364 million,” it added.
iProperty Group, founded in 2007, and headquartered in Kuala Lumpur, Malaysia, owns leading property websites in Hong Kong, Malaysia, Thailand and Indonesia.
REA Group, headquartered in Melbourne, Australia, is a digital advertising company that operates Australia’s leading property websites and real estate websites in Europe, Asia and the US.