CoStar Courts Domain with $2.7bn Takeover Bid

Australia’s second-biggest real estate platform says it is considering a $2.7-billion takeover bid launched by US property giant CoStar.

Domain confirmed the bid to the ASX on Friday.

CoStar, a provider of commercial and residential real estate information, analytics and online marketplaces, on Thursday acquired 17 per cent of Domain and made a non-binding indicative offer to the board, which valued Domain at $2.6 billion.

That exceeds Domain’s market capitalisation of $1.9 billion.

By Friday morning CoStar’s share had risen to 20 per cent.

On Friday Domain shares closed up 39.4 per cent at $4.35. Earlier in the day it reached $4.50.

Domain owner Nine Entertainment closed up 20.6 per cent while its main competitor REA, which is backed by News Corporation, fell more than 10 per cent.

In a statement, Domain said its board had begun an assessment of the proposal, which it said would require approval from the Foreign Investment Review Board if endorsed.

▲ CoStar’s headquarters in Washington DC.

“There is no certainty that the proposal will result in a transaction. Domain will appoint advisers to assist in this process,” the statement said.

Free-to-air TV network owner Nine, also the publisher of titles including The Australian Financial Review, holds 60 per cent of Domain.

“Domain is of strategic importance to Nine’s media ecosystem and our long-term growth strategy,” Nine said in a statement.

On February 13, Domain reported a 46 per cent lift in net profit for the first six months of the financial year to $35.7 million.

CoStar’s US platforms include Apartments.com and Homes.com—the second-largest residential real estate marketplace in the US, generating 110 million average monthly unique visitors.

It employs around 6550 staff in 13 countries and was founded by Andrew Florance in the 1980s. He remains president and chief executive of the group.