The owner of the USA's second-largest residential real estate marketplace Homes.com has made a $2.65 billion bid to acquire Australia's runner-up in the same industry, with CoStar Group Inc (NASDAQ: CSGP) offering a non-binding, all-cash deal to buy Domain Holdings (ASX: DHG).
Domain's shares rebounded over the course of the past seven days from $2.75 to $3.12 following an uplift in earnings and the appointment of Greg Ellis as interim CEO, filling the shoes of longstanding exec Jason Pellegrino whose departure was announced last year.
The takeover proposal today at $4.20 represents a further 35 per cent premium - levels not seen since July 2023.
In the lead-up to the announcement and shortly after CoStar reported its annual revenue result of US$2.74 billion ($4.3 billion), on 20 February the US multinational acquired 16.9 per cent of Domain shares at $4.20 per share.
The proposal depends on several conditions including unanimous approval from Domain's board, due diligence, no material changes to the business, final internal CoStar approvals, and a green light from Australia's Foreign Investment Review Board (FIRB).
The Domain board has commenced an assessment of CoStar’s proposal and notes shareholders do not need to take any action about the offer at this stage.
"There is no certainty that the proposal will result in a transaction," the group said in a statement to the ASX.
If Domain changes hands from its current majority owner Nine Entertainment (ASX: NEC) to CoStar, it would signify US ownership of Australia's two leading real estate marketplace brands realestate.com.au and Domain.
Realestate.com.au is part of REA Group (ASX: REA) which is majority-owned by an Australian subsidiary of Rupert Murdoch's US-incorporated media empire News Corporation.
Domain is dwarfed in size by its competitor REA which has a market capitalisation that is more than 10 times greater, although REA investors reacted negatively to today's news with shares plunging 11.5 per cent, wiping $4 billion in value.
Meanwhile, Nine Entertainment shares have surged by 19 per cent this morning.
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