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CoStar Group has sweetened the pot for Nine Entertainment, the owners of Australia’s second-largest real estate classifieds firm, Domain.
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On Tuesday, Domain (ASX: DHG) announced CoStar’s new offer on the Australian Securities Exchange. The firm said CoStar upped its offer from AUD 4.20 per share to AUD 4.43 per share, representing a final bid of AUD 2.8 billion, or $1.8 billion. That’s a $100 million jump from the Virginia-based company’s first bid and is a 42 percent premium from Domain’s AUD 3.12 closing price per share on Feb. 20 — the day CoStar made its first offer for the classifieds firm.
Domain’s board of directors said they “intend to unanimously recommend the Transaction” in the absence of “a superior proposal.”
“[This transaction] subject only to entry into a binding implementation agreement on acceptable terms and an independent expert concluding, and continuing to conclude, that the Transaction is in the best interests of Domain shareholders; and Domain’s Board entering into an exclusivity and process deed on terms acceptable to CoStar,” the announcement read.
Australia’s Financial Times reported on Thursday that CoStar founder and CEO Andy Florance spent the weekend in Sydney with former Australian ambassador to the U.S. and federal treasurer Joe Hockey, and then spent Monday and Tuesday in meetings with Macquarie Capital, which helped CoStar purchase 19 percent of Domain (ASX: DHG) stock in February, and Nine Entertainment executives.
CoStar and Domain will now begin the due diligence process, which includes auditing a company’s finances, tax obligations, legal liabilities, and contracts and operations. An anonymous insider told the Financial Times the due diligence process will take up to four weeks.
If CoStar is able to seal the deal on Domain, it would add another layer to its ongoing rivalry with News Corp, which owns REA Group alongside real estate listing company Move, Inc. and its subsidiary, Realtor.com.
CoStar and News Corp have locked horns over the past several years as CoStar has pushed the pedal to the metal on growing residential portal Homes.com. The two companies have squabbled over traffic and advertising claims, which led to Move filing a theft of trade secrets lawsuit against CoStar in July 2024. The case is scheduled for trial in August.
REA Group has been Australia’s leading real estate platform for over two decades. In REA Group’s latest half-year earnings report, the company saw its revenue increase 20 percent year over year to AUD 873 million, with net profits rising 26 percent to AUD 314 million as Australia experiences a pop in new listings and sales activity. Traffic to REA Group’s residential portal, realestate.com.au, reached 12.4 million unique monthly visitors in January based on Ipsos data, keeping it solidly in the No. 1 spot.
Domain also logged a solid performance in its latest half-year earnings, with revenues increasing 7 percent year over year to AUD 217.2 million. Nine didn’t provide exact traffic statistics but said Domain experienced “double-digit growth in unique audience and listing views.” Domain’s digital businesses, which include advertising solutions and three real estate print magazines, were flat for the half-year.
Although CoStar has been tight-lipped about Domain — Florance has only issued one statement on the deal’s progress — News Corp hasn’t been silent about its rival’s latest move.
“We have the comparative advantage in these competitive markets of having media properties,” Thomson said, according to Financial Review, of CoStar’s Domain bid. “And in the world when search is fundamentally changing because of [artificial intelligence] … your ability to create a ‘network effect’ with your own sites — to be able to drive traffic to Realtor.com from MarketWatch, be able to drive traffic to REA in Australia from news.com.au — that’s a huge advantage.”
