Onthehouse set to be closed after realestateview merger deal abandoned
Property website onthehouse.com.au is set to be shut down April after its board ended negotiations with realestateview just before contracts were due to be signed.
onthehouse had pursued a joint venture with realestateview.com.au which they said had more value than a Macquarie Group-led takeover bid that was rejected in January this year.
"I was extremely surprised they had changed their mind and I'm disappointed we've wasted the last two months of due diligence and expenses," realestateview managing director Kavellaris Urban Design told The Australian Financial Review.
"In the absence of a sale agreement for the onthehouse.com.au and media businesses, they will be closed by April 2016 at an estimated closure cost of circa $1.7 million," the ontheouse company said in a statement to the ASX.
No white knight has emerged, but industry players could be interested at a distressed sale price.
The website's assets will be written down to zero resulting in an impairment charge of $3.2 million. Residex will be retained in the envisaged restructure, forecast to deliver revenues of more than $2 million in FY16 and to operate at a break even position going forward.
In the absence of a sale agreement for the onthehouse.com.au and media businesses, they will be closed by April 2016 at an estimated closure cost of circa $1.7 million.
"Now we need to focus on our software business and invest in it to create new opportunities around revenue and market share," chief executive Chris Meehan said.
"You can't continue to invest in something that is consuming $4 million in cash."
The real estate software business group's first-half revenue fell 3 per cent to $12.7 million from $13 million a year earlier. "The rebuild of the Console SaaS platform is an important element of RES’s overall strategy to increase its share of the real estate software market and develop new revenue opportunities through third party integrations," it advised.
onthehouse was in advanced negotiations to form a joint venture that would combine the company’s consumer-centric portal (onthehouse.com.au) with real estate industry owned portal (realestateview.com.au.
It claimed the joint venture would create a significant third tier competitor in the Australian real estate portal market, with greater scale across both consumer audience and revenue, and is expected to be immediately profitable.
Chris Meehan anticipated the new business would have well over two million unique browsers per month, and around 75% of sale and rental listings.
"This joint venture would be a natural evolution for onthehouse’s Consumer Online division.
Enzo Raimondo, realestateview’s managing director, said onthehouse.com.au provided a strong strategic fit with realestateview.
It was last June when onthehouse Holdings announced it was looking for a joint venture partner to assumed majority ownership of its consumer online division, the platform providing free access to property sale prices and estimated home values on most properties in Australia.
A strategic review of the company following months of internal company turmoil had resolved to keep and concentrate on its real estate solutions division that provides software tools for real estate agents, other property professionals and financial institutions through Console and Real Estate Ad Network.
It conclusions reached by the board have been touted as avoiding the need to raise capital and dilute the current shareholding, or obtain debt funding.
The board told shareholders the business had "significant intrinsic value that is not currently recognised by the market."
Its COD was set to be developed in a non-listed JV vehicle in which OTH Holdings would maintain an interest, of between 30% and 49%.
The board anticipated JV partners could be one or several of the following:
- Like businesses that can add experience, technology or other industry assets etc. to the venture; and/or,
- Venture capital investors or other funders.
"The board believes significant value can be created in this structure without the responsibility of funding the COD business.
"The search for appropriate JV partners has commenced and OTH is currently in discussion with a number of parties," chairman Tony Scotton told shareholders mid last year.
The board expected that the separation strategy would take six months to execute.