CoStar, a U.S. real estate firm, has announced its acquisition of Australian property listings platform Domain for A$3 billion ($1.92 billion), including debt. This move is aimed at creating a strong competitor to News Corp’s REA in the real estate market. The deal comes after weeks of due diligence by CoStar, which already holds a 16.9% stake in Domain.
The agreed-upon offer from CoStar is A$4.43 per share, and Domain shares saw a significant increase of 5.2% to A$4.47 following the announcement. Nine Entertainment, the largest shareholder of Domain, has expressed its support for the deal and is set to receive A$1.4 billion for its 60.1% stake. This news also caused Nine’s shares to jump by as much as 8.1% to A$1.61.
CoStar initially acquired a stake in Domain in February and made an initial takeover offer of A$4.20 per share, which was later increased. The acquisition will be subject to a shareholder vote in mid-August. Spatium Capital portfolio manager Jesse Moors has raised concerns about the sovereignty risk associated with an American firm owning Australian residential housing data.
Nine, which owns newspapers like The Age and Australian Financial Review, has not been able to match Domain’s success compared to its rival REA, controlled by News Corp. REA’s market value has soared to A$33.16 billion, while Domain is currently valued at A$2.69 billion. As a result of the CoStar- Domain deal, shares in REA fell by up to 4.2%.
Analysts from Citi believe that there will not be a significant impact on REA’s position in the market in the next 1-3 years. CoStar, originally focused on providing information and analytics for commercial real estate, has shifted its focus to establishing a strong presence in online property marketplaces.
The acquisition of Domain by CoStar marks a significant development in the real estate market. The integration of these two companies is expected to create a formidable competitor to existing players like REA. With the deal set to go through a shareholder vote, the future of the Australian property market could see a major shift in the coming months.
