News Corp's realestate.com.au makes move into United States digital property market
News Corp and Realestate.com.au are buying the US online property business Move in a deal that values the company at $US950 million ($1.08bn).
The deal is led by News Corp chief executive Robert Thomson. REA Group, which is 61.6% owned by News Corp and is the operator of Australia’s number one property website realestate.com.au, will take a 20% stake in Move with 80% to be held by News Corp.
The sale price represents a premium of 37% over Move’s last closing stock price. REA’s share will be acquired for approximately $US200 million.
Listed on the Nasdaq stock exchange, Move has the property portals realtor.com, seniorhousingnet.com and moving.com, a website that seeks to capture the increased amount of time people spend on the internet researching auxiliary real estate topics, such as home removals, rentals and home-improvement projects. These might be searches before or after making actual purchase decisions.
It has the exclusive and perpetual right to operate realtor.com, the official site of the National Association of Realtors (NAR).
The group has 35 million monthly unique visitors.
Move reported $US227 million in revenue last year generating the highest revenue per unique user in the industry.
Thomson said in a statement to the Nasdaq he intended to use the media platforms and compelling content to "turbo-charge traffic growth" and create the most successful real estate website in the US.
The takeover will up the ante in the $US34 billion US digital real estate market, where the top two players recently announced plans to merge.
In July the US market leader Zillow agreed to buy Trulia for $US3.5 billion. Trulia and Zillow lost a combined $US30 million in 2013.
Australian tycoon James Packer is Zillow’s second largest shareholder, with a 9.4% stake through his private investment vehicle Cavalane Holdings.
Robert Thomson said real estate agents and brokers are expected to spend $US14 billion on online advertising in 2014, of which Move is expected to capture about 2%.
The US real estate market, the world’s largest, has room for robust growth in coming years, according to Thomson, and "was still in the early days of its digital transition."
There are approximately 2 million real estate agents and brokers in the US that generate approximately $60 billion of commission income annually.
"We believe there is much room for that percentage to grow, because the market is in the midst of a secular shift to digital advertising as real estate agents seek to reach home buyers where they are spending their time and searching for homes – online.
"We’re bullish about Move’s prospects as more marketing is directed online and realtors require state-of-the-art software to maximize their returns.
"We look at other competitors in the US market as well as other platforms around the world as an important indicator of the size of the opportunity.
"According to Euromonitor – there are 259 million Internet users in the US, nearly 5x that of the UK and 14x that of Australia.
"According to census data, 5 million homes are sold per annum in the US, 5x that of the UK and 10x that of Australia.
"There is certainly a huge variation in valuation versus market potential across these geographies," he said.
REA’s operations and investments include leading online real estate websites in Italy (casa.it) and Luxembourg (atHome.lu) with presence also in regional France. In Asia, REA
operates MyFun.com for the Chinese market and squarefoot.com.hk in Hong Kong and recently acquired a 17.22% stake in iProperty, the leading online real estate advertising business across South East Asia.