CoStar Group proposes to acquire OnTheMarket for GBP 1.10 per share in cash

CoStar Group announced a proposal to acquire OnTheMarket, the third most visited residential property portal in the United Kingdom, for GBP 1.10 per share in cash or approximately GBP 100M. OnTheMarket was founded by agents in 2013 to provide a competitive alternative to the existing UK property portals. Since then, it has successfully developed a large network of agents and property listings by taking an agent-friendly approach. Today, OnTheMarket has over 13,000 agent advertisers. CoStar’s websites drew approximately 280M visits in September, roughly twice the monthly visits reported by Rightmove. OnTheMarket is headquartered in London and has approximately 180 employees. Revenue for the twelve-month period ending July 31, was approximately GBP 35M, with adjusted EBITDA of GBP 8M. Based on enterprise value of approximately GBP 87M, transaction multiples for the trailing twelve-month period are 2.5x revenue and 11x adjusted EBITDA. CoStar Group intends to invest GBP 46.5M into sales and marketing in the first full year following the commencement of the integration of the portal into CoStar’s network of residential marketplaces. That amount represents six times OnTheMarket’s current annual media spend and more than three times the current annual media spend of Rightmove. The sales and marketing investment is the first stage of a multi-year investment program totaling hundreds of millions of pounds to drive more consumers to the OnTheMarket portal with the goal of significantly increasing the quantity of valuable leads to OnTheMarket’s agent clients. The transaction is expected to close in the fourth quarter subject to shareholder approval and customary closing conditions. CoStar Group plans to discuss the OnTheMarket acquisition during the third quarter 2023 financial results conference call scheduled for October 24.