(Australia's Domain Holdings announced on Friday that the U.S.-based online real estate company CoStar will purchase the property listings business for an estimated enterprise value of A$3 billion ($1.92 billion)).
As part of the agreement, CoStar along with its subsidiary, which currently holds a 16.9% share in Domain, will purchase the rest of the company’s shares for A$4.43 each. This represents a 4.2% increase over the stock’s previous day closing price on Thursday.
The domain might opt to announce an additional one-time dividend of up to A$0.10 per share, consequently lowering the transaction value by this sum, as stated.
This agreement represents CoStar’s initial entry into the Australian market and has the potential to reshape an industry where listing numbers have declined due to elevated living expenses dampening Australia’s once-booming real estate sector. However, circumstances are beginning to improve as interest rates decrease.
For many years, Domain has trailed behind the bigger classifieds site realestate.com.au, owned by the REA Group controlled by News Corp.
The domain's board has collectively endorsed a recommendation for shareholders to approve the suggested agreement. This endorsement is contingent upon obtaining necessary clearances from entities such as the Foreign Investment Review Board (FIRB) and other relevant regulators.
The domain's 60% stakeholder, Nine Entertainment, stated separately that this transaction appropriately represents the strategic worth of its share in Domain. They also mentioned their intention to support the agreement through voting, provided no better offers emerge.
Nine anticipates receiving approximately A$1.4 billion in cash proceeds from the transaction and might choose to issue a special dividend ranging between 47 to 49 Australian cents per share.
At 0044 GMT, Domain’s shares had risen by 2.9%, reaching A$4.375, which is their highest value since late March. Meanwhile, Nine’s shares were also performing well, increasing by 4%.
($1 equals 1.5640 Australian dollars)
(Reported by Himanshi Akhand in Bengaluru; Edited by Rashmi Aich)
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