A new player in property
The business news that matters
Hello and welcome to the latest edition of Off to Lunch…
The residential property market in the UK is set for a shake-up after US company CoStar agreed to buy online property portal OnTheMarket for £99 million.
CoStar will be a powerful rival to Rightmove and Zoopla’s dominance of the online property market in the UK. CoStar is listed on the Nasdaq index in the US and is valued at $32 billion (£26 billion).
Shares in Rightmove were down by 13 per cent in morning trading in London following the announcement, valuing the company at around £4 billion. The graph below shows Rightmove’s share price over the last year. The sharp fall at the end is today’s movement…
Andy Florance, the founder and chief executive of CoStar, said in the announcement.
"We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar into the estimated £8 trillion United Kingdom residential property market. We are excited to welcome the OnTheMarket team to the CoStar family.”
OnTheMarket was launched in 2015 by a collection of estate agents in response to the growth of Rightmove, which acts as a shop window for people to buy and sell homes and has been one of the UK tech success stories of the 21st century. The estate agents behind OnTheMarket include Savills, Knight Frank and Chestertons.
CoStar provides data and news on the property industry and in 2021 bought Homes.com, which offers a similar service to OnTheMarket and Rightmove in the US.
Jason Tebb, chief executive of OnTheMarket, said:
"From a position of strength, partnering with CoStar will significantly accelerate our strategy with the clear target of becoming the market leader, whilst staying committed to fair and sustainable pricing. CoStar will bring industry-leading global expertise and significant financial firepower to invest in OnTheMarket, allowing us to accelerate our transformation of the sector.”
The offer for OnTheMarket is priced at 110p per share, 56 per cent more than the closing share price last night, but down on the highs that the company reached shortly after floating. The graph below shows how OnTheMarket shares have performed since the float in 2017…
The board of OnTheMarket is recommending that shareholders vote in favour of the deal and nearly 30 per cent of investors, including the six largest, have already given their backing.
You can find the announcement by OnTheMarket and CoStar here
Other stories that matter…
1. Australian tech company Employment Hero has raised $167 million (£138 million) to expand in the UK. It offers an online HR, recruitment and payroll platform to small and medium-sized companies. Story by TechCrunch here
2. A collection of senior business leaders in the UK including Gerry Murphy, the chairman of Tesco, Dominic Barton, the chairman of Rio Tinto, and Sir Mick Davis, the founder of mining group Xstrata, have written a letter to the Financial Times calling for a “wholesale replenishment of the pool of domestic equity capital” to support UK businesses. This could include the Pension Protection Fund investing in UK businesses, they say. You can find the letter here
3. The media group Semafor is celebrating its first anniversary and says it has signed-up nearly 500,000 subscribers to its newsletters about global news. Justin Smith and Ben Smith, the co-founders, have listed the lessons they have learned from the first year, including the importance of knowing your audience and seeking “conversations, not traffic”, taking advantage of new digital sources of information to build content, and offering staff a closer relationship with the customer - ie readers - at the same time as helping them develop. You can read more here
4. Staff increasingly see sick days as a benefit rather than something to use only if it is truly necessary, according to a feature by The Wall Street Journal. You can read the piece here
5. New academic research has shown the benefits of being a humble chief executive. Financial analysts are likely to downgrade their forecasts for a company by less if a chief executive takes responsibility for a disappointing performance. John Authers has pointed out the research in his latest Bloomberg column here. You can find the research itself here
And finally…
Michael Lewis has been criticised for being too sympathetic towards Sam Bankman-Fried in his new book Going Infinite. Lewis robustly defended his book when I saw him speak at an event in London last week, blaming social media for much of the criticism and frustration. As a follow-up, I recommend checking out a review of Going Infinite by Ed Smith in The New Statesman. Smith is the former chief selector for the men’s England cricket team, a guest on our Business Studies podcast and a big fan of Lewis. However, in the review he suggests that a problem with the book is that Bankman-Fried is simply not as interesting as other Lewis’s previous subjects. Smith ponders whether the founder of crypto exchange FTX has such a narrow type of intelligence “that you begin to wonder if he’s intelligent at all”. You can read that piece here. I also recommended listening to Lewis being interviewed by Bloomberg’s Matt Levine, who created headlines last year when he questioned Bankman-Fried about whether crypto markets amounted to a Ponzi scheme. You can find the interview below…
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Best
Graham