CoStar Group and Nine Entertainment have reportedly begun negotiating the acquisition of Domain, the second largest real estate classifieds firm in Australia behind News Corp-owned REA Group. Nine’s target price is AUD 2.79 billion.
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A month after making a bid to purchase Australian real estate classifieds firm Domain, CoStar is allegedly one step closer to closing the multibillion-dollar deal.
Australian publication the Financial Times broke the news on Thursday, noting that insiders confirmed investment bankers representing CoStar and Domain parent company, Nine Entertainment, are negotiating the acquisition terms. CoStar, with the help of help of Macquarie Capital, purchased 19 percent of Domain (ASX: DHG) stock in February for AUD 4.20 per share. That set a purchase price of AUD 2.7 billion, or $1.7 billion USD, for Domain.
Nine has allegedly set a higher target of AUD 4.65 per share, which translates to an additional AUD 90 million for a final purchase price of AUD 2.79 billion, or $1.76 billion USD.
Nine’s counteroffer isn’t a surprise, as Domain’s stock has been on the upswing since the acquisition rumors. Domain’s price per share was trending in the AUD 3.00 range throughout January and early February, and has since been trending in the mid-AUD 4.00 range since CoStar’s stock rush. Domain’s price per share closed at AUD 4.35 on March 19.
The company’s latest earnings report also hinted toward a higher counteroffer, with Nine’s board of directors highlighting Domain’s importance as the second-largest real estate classifieds firm in Australia behind News Corp-owned REA Group.
“As has been reported, last week Domain received an unsolicited, non-binding indicative proposal from CoStar Group,” Nine’s Feb. 25 earnings release read. “Domain is of strategic importance to Nine’s media ecosystem and our long-term growth strategy. As Domain’s controlling shareholder, Nine will consider the CoStar proposal with a focus on the best interests of Nine shareholders.”
Domain has been safe from Nine’s cost-cutting plan, which included the consolidation of its divisions and streaming platforms. However, the Financial Times said some of Nine’s largest shareholders have allegedly advised the company’s leadership to take the deal, which would allow Nine to reduce its AUD 998.3 million, or $628.5 million USD, in debt and return a portion to investors.
“[AUD 4.60] would be a fair offer … and will be difficult for the Domain/Nine Boards to refuse,” MST Marquee analysts told the Financial Times.
Inman reached out to CoStar about the alleged negotiations. They did not answer in time for publication.
If CoStar is able to seal the deal on Domain, it would add another layer to the ongoing rivalry with News Corp, which also owns real estate listing company Move, Inc. and its subsidiary, Realtor.com.
CoStar and News Corp have locked horns over the past several years as CoStar has pushed the pedal to the metal on growing residential portal Homes.com. The two companies have squabbled over traffic and advertising claims, which led to Move filing a theft of trade secrets lawsuit against CoStar in July 2024. The case is scheduled for trial in August.
Although CoStar has been mum about Domain — “CoStar Group continuously evaluates M&A opportunities across a broad range of companies to maximize shareholder value. We do not comment on market rumors or speculation,” a company spokesperson told Inman on Feb. 20 — News Corp hasn’t been silent about its rival’s latest move.
“We have the comparative advantage in these competitive markets of having media properties,” Thomson said, according to Financial Review, of CoStar’s Domain bid. “And in the world when search is fundamentally changing because of [artificial intelligence] … your ability to create a ‘network effect’ with your own sites — to be able to drive traffic to Realtor.com from MarketWatch, be able to drive traffic to REA in Australia from news.com.au — that’s a huge advantage.”
“So not only in a commercial sense, but in an editorial sense, you’re able to move traffic around,” he added. “… Andy [Florance is] a great competitor himself. And so you can certainly spend a lot of money on marketing, but what we can do, really without spending money, is networking.”
REA Group has been Australia’s leading real estate platform for over two decades. In REA Group’s latest half-year earnings report, the company saw its revenue increase 20 percent year over year to AUD 873 million, with net profits rising 26 percent to AUD 314 million as Australia experiences a pop in new listings and sales activity. Traffic to REA Group’s residential portal, realestate.com.au, reached 12.4 million unique monthly visitors in January based on Ipsos data, keeping it solidly in the No. 1 spot.
Domain also logged a solid performance in its latest half-year earnings, with revenues increasing 7 percent year over year to AUD 217.2 million. Nine didn’t provide exact traffic statistics but said Domain experienced “double-digit growth in unique audience and listing views.” Domain’s digital businesses, which include advertising solutions and three real estate print magazines, were flat for the half-year.
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