Domain a takeover target as US property giant pounces
Nine Entertainment-owned Domain is poised to tackle a takeover offer from US property giant CoStar, which has picked up close to a 20 per cent stake in the digital real estate business.
Nine, the publisher of the Sydney Morning Herald, Age and the Australian Financial Review, has a 60 per cent stake in Domain and the bid for the business comes as it conducts a strategic review of its overall operations.
A potential sale of Domain will be a big shakeup of the real estate classifieds market.Credit: Dion Georgopoulos
The news of the share raid by CoStar was first reported in the Australian Financial Review’s Street Talk, which noted that Macquarie Capital had bought shares on behalf of the US company at $4.20 a share.
Domain shares have been trading at around $3, and closed at $3.12 on Thursday, giving it a market cap of $1.97 billion. The price paid by CoStar for the Domain shares values the business at $2.7 billion.
A potential sale would mark a significant shakeup of the local real estate classifieds market, which has largely been dominated by the News Corporation-owned REA Group, with Domain coming in a distant second.
CoStar’s interest also offers Nine an opportunity to test the waters on whether it’s worth rebalancing its portfolio of assets, which also includes publishing, broadcast, streaming and radio businesses.
In January, acting Nine chief executive Matt Stanton announced a restructure that included a new Marketplaces division, led by chief digital officer Alex Parsons, aimed at getting better returns from Domain and Drive.
“The creation of a Marketplaces division will provide greater focus on Domain and Drive, ensuring we capitalise on value-creation opportunities across the Group,” Stanton said at the time.
Domain lost its chief executive Jason Pellegrino in October and is yet to appoint a permanent replacement. Earlier this month, Domain said that current board member and former REA boss Greg Ellis would serve as interim chief executive.
