REA Group has made an offer to acquire 100 per cent of iProperty Group, a Malaysia-based company that owns the market-leading portals in Malaysia, Thailand, Indonesia and the Hong Kong region, as well as a leading portal in Singapore.
The deal values iProperty at $751 million, although REA Group would only pay $578 million as it already owns 22.67 per cent of the company.
REA Group said the proposed acquisition is consistent with its strategy of investing in high-growth regions.
“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,” it said.
The markets represented by iProperty are behind Australia in their transition from print to online marketing, according to REA Group.
This represents “an enormous monetisation opportunity”, particularly given that the real estate advertising budgets in those markets are “similar to that of Australia and growing faster”.
REA Group said it would fund the acquisition from new debt facilities totalling $480 million, with the remainder from existing cash reserves.
According to its most recent accounts, iProperty posted a $1.4 million loss for the six months to 30 June 2015, although this was an 86.7 per cent improvement on the $10.8 million loss posted the year before.
Revenue from continuing operations also improved, jumping 37.2 per cent to $15.1 million.
Chairman Patrick Grove said iProperty looks forward to its business going from strength to strength under REA Group, assuming the deal gets approved by shareholders and regulators.
Mr Grove said the two companies are “highly complementary” and that there is a “strong strategic rationale” to bringing them together.
REA Group acquired a 17.22 per cent shareholding in iProperty in July 2014, which it then increased to 19.90 per cent in December 2014, 21.33 per cent in July 2015 and 22.67 per cent in August.
REA Group has offered to pay iProperty shareholders $4 per share, which represents a 20.1 per cent premium to iProperty’s one-month volume-weighted average price and a 29.4 per cent premium to its three-month volume-weighted average price.
The acquisition is expected to be completed during the first quarter of 2016.
[Related: REA Group posts $210.2m annual profit]