Rightmove tumbles as OnTheMarket agrees £99m CoStar takeover

(Sharecast News) - Rightmove tumbled on Thursday after smaller rival OnTheMarket agreed to be taken over by US commercial real estate information group CoStar in a £99m deal. In research written before OnTheMarket confirmed the takeover, Citi said the news would be negative for Rightmove.

The bank said it believed there had been some hope that Rightmove could be one of the M&A targets, noting that the shares were up 7% since the chief executive of CoStar said on 5th October that the company planned to allocate a portion of its $9bn 'war chest' to consolidating European property portals.

"A CoStar acquisition of OTM makes RMV an unlikely option given RMV's dominance," Citi said.

It also noted that CoStar has firepower - $450m to $500m free cash flow per year - so Rightmove could face more intense competition in residential and other areas, especially given CoStar's strength in commercial.

Citi maintained its 'sell' rating on Rightmove.

At 0930 BST, the shares were down 10.4% at 515.33p.