In a major announcement that is set to reshape the landscape of the United Kingdom’s property market, CoStar Group and OnTheMarket (OTM) have unveiled a transformative merger agreement. The two companies have come to terms on a recommended cash offer, opening doors for OTM to ascend as the leading property portal in the country.
The agreement encompasses a generous offering of 110 pence per share, signifying a substantial premium of 56.0% over OTM’s last closing price and an even more remarkable 93.2% premium over the three-month volume weighted average price.
This momentous deal has received unanimous endorsement from the board of OTM. Furthermore, CoStar Group has secured irrevocable undertakings and letters of intent accounting for approximately 29.5% of OnTheMarket’s shares. This notable portion includes the ownership interests of OnTheMarket’s six largest shareholders, including the prominent Spicerhaart.
Crucially, CoStar Group has affirmed its unwavering commitment to maintaining OTM’s position as ‘the agents’ portal,’ assuring a framework of equitable and sustainable pricing. The merger not only propels OTM’s trajectory to UK market leadership but also heralds an array of strategic moves:
- Substantial Investment: CoStar Group has pledged to invest a significant sum of £46.5 million in sales and marketing during the initial year following the integration. This marks the initiation of a multi-year investment program, which is anticipated to reach the realm of hundreds of millions of pounds. The objective is to drive a higher volume of consumers to the OnTheMarket portal, dwarfing the current expenditure levels by a factor of six compared to OTM’s current budget and more than three times the annual media spend of Rightmove.
- Competitive Pricing for Agents: The merger emphasizes the commitment to OTM’s reputation as ‘the agents’ portal’ by perpetuating a pricing model that charges agents only a fraction of the fees levied by Rightmove.
- Enhanced Offerings: The infusion of CoStar’s expertise is poised to open avenues for growth, enabling the development of agent and consumer offerings through additional products, services, and functionality.
Jason Tebb, CEO of OTM, expressed his enthusiasm, stating, “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, echoed this sentiment, saying, “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.”
This momentous agreement is poised to reshape the UK property portal landscape, as CoStar Group’s substantial investment and commitment to sustainable pricing propel OnTheMarket into a prominent position, poised for market leadership in the property sector.