US property giant CoStar seals $3b deal for Nine Entertainment-controlled Domain Holdings

Australian property listings platform Domain has sealed a $3 billion deal with CoStar after the US suitor sweetened its offer to get its hands on the Nine Entertainment-controlled group.

CoStar, which already has a near-17 per cent stake in Domain, has been circling the company since February, when it lobbed an all-cash offer of $4.20 a share.

It returned a month later with an extra 23¢ a share — the $4.43-a-share bid is a 50 per cent premium to its one-month weighted average before the offer was revealed.

Domain said on Friday it had now entered into a binding scheme implementation deed and is urging shareholders to back the deal.

With Nine holding a 60 per cent stake in Domain and declaring its support for the takeover, the final stumbling block now seems only to be a nod from the Foreign Investment Review Board.

Domain chair Nick Falloon said CoStar’s proposal — with limited conditions — “represents compelling value and a high degree of certainty” for shareholders.

“This proposal is an endorsement of the strong fundamentals of Domain, and we are confident this position will be further strengthened with CoStar’s support,” Mr Falloon said.

CoStar, a $52 billion Nasdaq-listed company, pitches itself as a provider of information, analytics, and marketing services to the commercial property industry in North America and Europe.

Its deal for Domain could now shake-up rival REA Group’s dominance of the Australian real estate space and its far more popular realestate.com.au website.

“We’re pleased to have reached an agreement with Domain and to see Nine’s support of this transformative transaction,” CoStar chief executive Andy Florance said.

“With our technology, scale, and the innovation we’re known for, we see a tremendous opportunity to enhance the Australian property market.”

Nine owns the Nine free-to-air TV network, newspapers including The Age and Australian Financial Review, and radio stations such as Sydney’s 2GB and Melbourne’s 3AW.

But Domain has become an increasingly important source of revenue as traditional media advertising declines and some market watchers said it would take an attractive offer for it to consider relinquishing its hold.

The cash generation power of Domain overtook Nine’s publishing arm in the December half-year as the group’s second-biggest earner after the television division.

Its profit rose 14 per cent to $77.8 million before interest, tax, depreciation and amortisation and now accounts for 29 per cent of group earnings. Domain’s revenue was 7 per cent better at $217.2m.

CoStar’s success in snagging Domain extends a global wave of consolidation and attempted takeovers in the property sector as borrowing costs around the world start to fall.

REA Group made several ill-fated offers for the UK’s Rightmove last year.