News Corp controlled REA Group is buying Mortgage Choice for $244 million, as the real estate listings company seeks to expand the size of its mortgage broking business.
While its listing business is doing well from the current boom in interest in homes and surge in prices, the Murdoch family-controlled News Corp wants REA to deepen its involvement with customers past the sales stage.
REA is 61%-owned by News Corporation and on Monday revealed it had offered a $1.95 a share for Mortgage Choice, a premium of 66% on Friday’s closing price.
Mortgage Choice shares ended the session up 62.5% at $1.91, a touch under the offer price but a sign there’s going to be any rivals emerge with a counter offer.
REA shares eased 1.8% at $137.45.
The Mortgage Choice board is unanimously recommending shareholders support the takeover, which will see the broker team up with REA’s Smartline broking business.
REA said the takeover would accelerate its push into financial services, by leveraging the company’s digital expertise and large audience of property buyers.
Mortgage Choice has more than 380 franchises across the country and made a net profit after tax of $4.1 million in the December half.
REA’s chief executive Owen Wilson said the deal was an “exciting opportunity for REA to create a leading broking business.“
“It builds on our success to date, accelerating our financial services strategy while leveraging our existing strengths and capabilities,” Mr Wilson said.
It’s the second big deal News Corp has done in the past week – last Thursday it bought the Investors Business Daily website from O’Neil Capital Management for $US275 million (about $A360 million), continuing the legacy media company’s push into digital publishing.
And there are reports the Murdoch family’s second company is about to reveal a third deal, announcing the purchase of the consumer book business of US publisher Houghton Mifflin Harcourt.
The deal was due to be revealed on Monday night, Sydney time and will add a portfolio of high-profile novels from authors such as George Orwell, Philip Roth and J.R.R. Tolkien to News Corp’s HarperCollins Publishers division. Terms of the deal were not known in Australia on Monday.
