OnTheMarket (OTM) and CoStar Group have this morning announced an agreement on the terms of a recommended cash offer for OnTheMarket, presenting a transformational opportunity for OTM to become the number one property portal in the UK.
The offer of 110p per share represents a premium of 56.0% to OTM’s last closing price and 93.2% to the three-month volume weighted average price.
The deal was unanimously recommended by the OTM Board while CoStar have also received irrevocable undertakings and letters of intent with respect to approximately 29.5% of OnTheMarket shares including OnTheMarket’s six largest shareholders including Spicerhaart.
CoStar says it remains committed to OTM position as ‘the agents’ portal’ with fair and sustainable
pricing.
Accelerating OTM’s strategy to become the UK market leader, CoStar Group has, as part of their offer, stated their intention to:
+ Spend £46.5m on sales and marketing in the first full year following the commencement of the integration, as the first stage of a multi-year investment programme totalling hundreds of millions of pounds to drive more consumers to the OnTheMarket portal. This is six times what OnTheMarket currently spends and more than three times the current annual media spend of Rightmove.
+ Strengthen OTM’s position as ‘the agents’ portal’ by continuing to charge agents a small proportion of what Rightmove currently charges
+ The OTM directors believe that CoStar’s expertise will also provide growth opportunities to develop the the portal agent and consumer offer through additional products, services and functionality.
Jason Tebb, CEO of OTM, said: “From a position of strength, partnering with CoStar Group will significantly accelerate our strategy with the clear target of becoming the market leader, whilst staying committed to fair and sustainable pricing.
“CoStar Group will bring industry-leading global expertise and significant financial firepower to invest in OnTheMarket, allowing us to accelerate our transformation of the sector. We have strong shared values in our commitment to agents who we believe will benefit from unparalleled value and greater opportunities to enhance their businesses.”
Andy Florance, founder and chief executive officer of CoStar Group, commented: “We believe the acquisition of OnTheMarket represents an attractive and efficient entry point for CoStar Group into the estimated £8 trillion UK residential property market. We are excited to welcome the OnTheMarket team to the CoStar Group family.
“We are excited to combine CoStar Group’s resources and leading marketplace experience with OnTheMarket’s agent-focused culture to create a leading player in the UK marketplace and provide increased choice and higher quality offerings for consumers.”
It will interesting to see what Jason Tebb will do with this sort of fire power behind him to take OTM to the next stage.
OnTheMarket has a golden opportunity to challenge the duopoly of Rightmove and Zoopla. Jason, a respected figure in the industry, can now break free from the constraints of a plc CEO role and hopefully he can focus on forging personal relationships across the estate agency industry. In a people-centric sector, trust and familiarity matter, and estate agents prefer doing business with those they know.
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well said Chris
CoStar has 9bn to invest in M&A, so for them to decide to take their punt on OTM instead of, say, Zoopla, is a big win in itself for Tebb and his crew.
Also interested to see how the tech evolves with CoStar’s generosity. UK scene needs a serious update technologically and I expect OTM to become the tech leader in the next couple of years.
exciting times!
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Jason has already forged relationships with people important and significant to OTM’s success
It is a mark of his leadership that while he was so obviously busy with this and his interim results he would take time to take phone calls and listen to what is being proposed. A leader and a gentleman.
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Sounds like a great deal for JT and his team – congratulations. Now he is freed from the shackles of being a PLC (extremely painful) I think he can challenge the two big players. He’s a smart bloke and, importantly imo, he understands the business of estate agency.
Building a business like this is always a blend of talent and deep pockets – it’s not enough to have plenty of stock, people need to know about you, where to find you, and be able to see a real difference in the offering…. and that’s what £46m in marketing and advertising will do, probably.
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Exciting times ahead. I think most of us in this industry really want to see competition in this sphere to stop the RM stranglehold. Lets hope that they keep the ethos of fair pricing in the process. Fingers crossed, the tide is turning!
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You gullible lot. Onthemarket has never helped any agent.
6 years later I spend 24k a year on rightmove.
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……and I imagine Bless You, that every penny of that 24k is wasted simply because you fail to deal with emails in the way that you would like to think that you do…..
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What you talking about?
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That’s your choice not OTMs fault or certainly
Not the current Regime there
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I’ll be interested to see how the “small proportion of what Rightmove currently charges” will materialise over the coming years.
“estimated £8 trillion UK residential property market” – I wonder how much of this figure, presumably much of which is generated by agent data, will be returned to agents?
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Please don’t go throw it all away on adverts like ‘Slam Dunk’
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Since OTM is “‘the agents’ portal’”, I’m gathering that shareholding agents got to vote on this decision?
Worryingly, the agent shareholder messages I’ve seen this morning on social media suggest they had no idea.
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I had no idea.
But am being asked to vote.
Which way to vote and I don’t have much of a clue. Hence reading others comments.
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