👉 Background: REA Group is the listed real estate advertising company that’s behind Realestate.com.au, Australia’s largest property website and is majority-owned by News Corp Australia. It also owns other property-related websites like realcommercial.com.au, flatmates, and Mortgage Choice.

👉 What happened: Now, REA Group has announced it’s considering putting forward an offer to acquire UK’s largest digital property platform, Rightmove in a $9 billion acquisition - which would be made up of cash and shares.

👉 What else: This deal would turn REA Group into a global powerhouse in the real estate market. And after the announcement, Rightmove’s share price jumped 27% but REA’s share price dropped over 5%.

What's the key learning?

💡Acquisitions can often shake investor confidence, before they build up investor confidence. While Rightmove’s share price surged on the prospects of an acquisition, REA's investors were clearly less keen.

💡Australian companies haven’t exactly had the best track record with expanding in the UK recently, as seen with Wesfarmers, Lendlease, and AMP who have more or less failed in their quest for UK domination.

💡This isn’t the first time we’ve seen a split reaction to an acquisition announcement. Remember when Wesfarmers announced it was looking to acquire API, the owner of Priceline in 2021? At the time, API's share price jumped almost 17%, while Wesfarmers' remained flat. So clearly REA is testing the market to see whether investors are supportive before making their move.

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