Australia's REA Group to buy rival iProperty for $536 mn

Australian online property business REA Group Ltd, a subsidiary of media giant News Corp, plans to acquire rival iProperty Group Ltd for approximately A$750 million ($536 million), looking to expand its operations into the lucrative South East Asian market.

REA, which operates Australia's leading property website, has submitted an offer to buy all of the outstanding shares of iProperty at A$4.00 per share in cash or an optional cash-and-stock arrangement, according to a company release.

REA CEO Tracey Fellows said, ''This acquisition further demonstrates our commitment to international expansion, and is the next step in our growth strategy in the Asian region.''

The acquisition will bring iProperty into REA's existing portfolio of digital real estate advertising businesses, and enable the business to take the next step in its evolution, she said.

Further to the news, iProperty shares jumped over 9 per cent to close at A$3.84 today on the Australian Stock Exchange (ASX), while REA stock ended 1.7 per cent up at A$48.87.

Kuala Lumpur, Malaysia-headquartered iProperty owns the leading property portals in Malaysia, Hong Kong, Thailand and Indonesia and also websites in several other Asian countries. The ASX-listed company's major shareholders include private equity firm Catcha Group and REA.

Last month iProperty expanded into Thailand by buying Thailand's leading portal following an earlier acquisition of another website

Melbourne-based REA Group Limited is a multinational digital advertising business specialising in property. Apart from Australia, the group operates real estate portals in Europe, China and also in the US.

Seeing the growth potential in the South East Asian region, REA said, ''The real estate market is expected to continue to grow driven by expanding populations and increasing GDP per capita, with the acceleration from offline to online advertising presenting an enormous opportunity for iProperty, the statement said.

As an alternative to A$4.00 per share in cash, iProperty shareholders can also elect A$1.20 in cash and 0.7 shares in a newly formed, unlisted company.

The directors iProperty have recommended REA's offer to its shareholders, the release said.

The acquisition is expected to close in first quarter of 2016, subject to customary closing conditions including iProperty shareholder approval and court approval.

REA plans to fund the acquisition mainly with $480 million in debt, and the remaining through cash in hand.

The purchase is expected to have no significant impact on the fiscal 2016 earnings, the company said.

Citigroup Global Markets Pty Ltd is acting as financial adviser to REA on the deal.