REA Group has secured approval from the Australian Foreign Investment Review Board (FIRB) to go ahead with its proposed acquisition of fellow ASX listed company and mortgage brokerage business Mortgage Choice. Having cleared this hurdle the deal will now be brought before Mortgage Choice shareholders at a meeting scheduled for June 10th where REA’s A$1.95 per share offer will be put to a vote.
Majority-Newscorp-owned REA Group values Mortgage Choice at A$244 million and for that price will potentially be getting a business founded in 1992 which has been publicly traded on the ASX since 2004. According to company filings, Mortgage Choice generated A$22 million in revenue in the last six months of 2020 with A$4.1 million of that being post-tax profit. Since the announcement of the acquisition intention back in March, Mortgage Choice shares have jumped from around A$1.17 to over A$1.90 while REA Group’s share price has also risen and is currently trading at over A$165 per share.
REA Group is far from the only property portal looking at dipping its toes in the mortgage business. Since purchasing Mortgage Lender of America in late 2018 and launching its own brand home loans in April 2019, Zillow has only managed to turn a profit in its Mortgage business with the housing boom in the States over the last year or so and still has some way to go to meet its own lofty goals.
Although REA Group is not getting into the lending business with its latest acquisition, the synergies between property portals and mortgages are tempting enough for portals from the UK to Sri Lanka to want to get closer to them in one way or another.