US real estate giant mounts takeover bid for Nine’s Domain
American real estate giant Costar has bought up 16.9% of Domain and is mounting a takeover bid for the Australian listings company.
Costar scooped up the Domain stock on Thursday before the close of markets, paying $4.20 a share — 34.6% more than market value — in order to secure close to a fifth of the company.
Domain reported to the market this morning it has received an unsolicited, non-binding indicative proposal from Costar to acquire 100% of the company for $4.20 a share — or $2.7 billion — well in excess of Domain’s current market cap of $1.97 billion.
As part of the deal, Costar requires “unanimous approval” of Domain’s board.
Nine Entertainment, who own 60% of Domain, will now be forced to show its hand regarding the future makeup of the company.
Last month, the company restructured into three distinct divisions: TV and radio, publishing, and marketplaces.
Acting-CEO Matt Stanton said at the time, the creation of a marketplaces division was to provide a “more targeted oversight of Domain and Drive” and ensures Nine is “capitalising on value creation opportunities.”
This week, reports emerged that a consortium of media players, including former Macquarie Media owner John Singleton and ex-Nine CEO Matt Stanton, were eyeing Nine’s radio assets, including 2GB and 3AW.
If Nine is happy to sell Domain — a distinct possibility given TV-lover Bruce Gordon is currently increasing his holdings — Costar is well positioned to inject the required capital and care in the listings business to mount a challenge against the dominant REA Group.
REA runs realestate.com.au and is majority owned by News Corp.
The US-based Costar has a market cap of over A$50 billion (US$32.11b) and runs homes.com and apartments.com – two of the top five listings sites in America. It is also used to operating in a market with one dominant player, Zillow.
Last year, Costar paid A$54.7 million in advertising space during the Super Bowl — more than Pepsi or Budwieser — part of a US$1 billion push that the company touted as “the biggest marketing campaign in real estate history.”
Such a marketing blitz in Australia would upend the industry. Domain’s first-half earnings, reported last Thursday, rose by 14% to $77.8 million, but it remains in the shadow of REA Group, whose first-half revenue hit $535 million, a 22% leap in twelve months.
Last week, Domain appointed Greg Ellis, who ran REA between 2008 and 2014, as its interim-CEO, for a twelve-month period.
In his final investor call, outgoing Domain CEO Jason Pellegrino noted a 23% year-on-year increase in site visits during the last half of 2024, claiming it was now “outperforming the growth rate of our major competitor over the same period”.
Nine’s half-year results are due next Tuesday, February 25, and there will be a lot to discuss on the investor call.
Editor’s note: Mumbrella has changed the way it deals with company names. House style is now to use standard proper noun capitalisation on all names regardless of brand typography. Brand typograhy may be retained in direct quotes from releases.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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