Costar/OnTheMarket Takeover Edges Closer—While Brett Stone Pens Third Open Letter Denouncing Deal

OnTheMarket shareholders will vote on December 4, 2023, to determine the outcome of Costar's $100M takeover deal made on 19 October.

The expectation is that the deal will go through as planned, with the recommendation to vote unanimously in favour of the deal.

A letter from OnTheMarket chairman Chris Bell outlines why the firm believes Costar's offer to be "fair, reasonable, and in the best interests of OnTheMarket and OnTheMarket shareholders", while the valuation has been deemed "attractive".

Other details in Bell's letter include Costar's reasoning for why the acquisition of OnTheMarket represents an attractive entry point into the UK residential real estate market:

The combination of OnTheMarket's large network of agents and access to listings with Costar's fortress balance sheet...seeks to create the number one agent-friendly UK residential property portal and a genuine disruptor to the established market leaders. The acquisition will be an important step in the expansion of Costar's Homes.com residential network not only in the UK, but across Europe.

The letter also reasserted that OnTheMarket's existing management team and employees are expected to remain in situ after the takeover, and Costar "does not intend to initiate any material headcount reductions within the current organisation."

However, it is expected that each of the three OnTheMarket non-executive directors will resign their positions.

The wheels are turning on this one. OnTheMarket will almost certainly be under new ownership by 2024.

Meanwhile, outspoken investor Brett Stone has once again penned an open letter in opposition to the takeover. It is the third such letter this year. Coming in at over 1,500 words, Stone's letter outlined reasons why OnTheMarket shareholders, and the UK itself, will not benefit from Costar's imminent arrival into the UK market—as well as details of Stone's own offer to invest "between £74 million and £108 million in cash" in OnTheMarket in October 2022.

The crux of the letter is that OnTheMarket can do better than the Costar deal and that it is in the firm's best interests to reject the offer.

OnTheMarket has already responded to the open letter and denounced many of Stone's claims.