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US-based property data giant CoStar Group (NASDAQ: CSGP) has entered into a binding agreement to acquire the remainder of ASX-listed Domain Holdings Australia (ASX: DHG) that it does not already own, in a deal valuing the business at $3 billion.
The proposed scheme of arrangement, backed by Domain’s majority shareholder Nine Entertainment Co (ASX: NEC), would see shareholders receive $4.43 per share in cash, minus any fully franked special dividend of up to 10 cents. The transaction implies a premium of 42 per cent to Domain’s last share price of $3.12 before the proposal.
Domain’s board has unanimously recommended the offer, subject to no superior proposal emerging and an independent expert concluding the scheme is in the best interests of shareholders. Nine, which owns 60.1 per cent of Domain, has indicated it intends to vote in favour on the same basis.
The offer follows CoStar’s acquisition of a 16.9 per cent stake in Domain in February at $4.20 per share and a series of revised proposals that culminated in the latest deal.
The scheme is subject to conditions including shareholder and court approval, Foreign Investment Review Board (FIRB) clearance, and no material adverse changes.
Domain may declare a fully franked special dividend of up to 10c cents per share prior to implementation, potentially delivering up to four cents in franking credits per share for eligible shareholders. Any dividend paid will reduce the headline consideration accordingly.
“The Domain board has carefully considered the CoStar proposal and believes it represents compelling value and a high degree of certainty for Domain shareholders, through the cash offer and limited conditionality,” Domain chair Nick Falloon said.
“This proposal is an endorsement of the strong fundamentals of Domain, and we are confident this position will be further strengthened with CoStar’s support.”
If completed, the deal would mark a shift in ownership of Australia’s second-largest real estate marketplace to a US company, mirroring the status of industry leader realestate.com.au, which is controlled by News Corp’s US parent via REA Group (ASX: REA).
CoStar, which owns the US’s second-largest residential real estate site Homes.com, has described the $4.43 per share as its best and final offer.
For Nine, the sale is expected to generate net proceeds of around $1.4 billion, putting the media company into a material net cash position. Nine has flagged a potential fully franked special dividend in the range of 47 to 49 cents per share to return surplus capital to shareholders, subject to completion.
If the transaction completes, Nine, Australia’s largest locally owned media company, will have a strong balance sheet that puts it in a position for acquisitions and other strategic moves.
Shareholders will vote on the proposal in mid-August. If it is successful, the transaction is expected to complete in Q3 of 2025.
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