CoStar Makes Play to Enter Australian Market

Andy Florance is taking his rivalry with Rupert Murdoch to the latter’s home territory.

Florence’s CoStar Group submitted an all-cash proposal to acquire Domain, an Australian property advertiser, the Wall Street Journal reported.

Domain, which is controlled by Nine Entertainment, is the country’s second-largest property advertiser, trailing only News Corp’s REA Group.

The nonbinding offer is equivalent to about $2.66 USD per share. CoStar’s offer is a 35 percent premium to Domain’s share price before the local trading market opened. After Domain announced the bid, its shares quickly surged by about 40 percent, while Nine’s shares rose by 20 percent.

CoStar, which already has a 17 percent stake in Domain, did not immediately respond to a request for comment. Domain and Nine said they will consider the proposal.

While Domain’s shares are up for the year, its market capitalization still pales in comparison to REA. Murdoch’s firm is easily the most dominant player in Australia’s real estate property scene, sporting a market capitalization of $22.53 billion.

Lately Florence has been eyeing international expansion. Fourteen months ago, CoStar paid $125 million to take over OnTheMarket, one of the three most popular residential portals in the United Kingdom.

REA responded by trying to acquire the UK’s largest real estate portal, Rightmove, submitting a $7.3 billion bid in the fall. But Murdoch was rebuffed by Rightmove, dismissing REA’s first attempt to get into the European market.

CoStar also looked at acquiring Move, Inc., the immediate parent company of Realtor.com, an REA brand. By last February, however, the potential $3 billion acquisition fell apart.

In the United States, both CoStar and Realtor.com are chasing Zillow in terms of market share of monthly user visits, but the latter’s limited presence outside of North America presents an opportunity for global players to seize ground.

— Holden Walter-Warner