By Trevor Abrahmsohn, Founder of OnTheMarket.com and CEO, Glentree International.
As the founder of OnTheMarket.com (OTM), in 2010, and a substantial original shareholder, I am implacably against the present offer of 110p per share or £100million for the entire issued share capital of OTM.com.
I have two main observations:
1. There should be/should have been, a proper auction between CoStar, Zillow and for instance, the Australian counterpart portal, RealEstate.com.au (and others) for OTM PLC, which to my knowledge has not taken place and may have/may still produce some interesting hybrid bids.
2. By selling the entire share capital, rather than a stake in the company (i.e., 25% or 50%), the original shareholders of OTM PLC are denied any share of the substantial upside which undoubtedly will be enjoyed by the acquisitor.
This is a pedestrian bid which may at first seem enticing against a lowly share price range for OTM PLC of 50-60p hitherto, but if the company had been properly promoted, it should never had been languishing at this level in the first place.
CoStar are not fools, they know that there is no room in the marketplace for a fourth portal (and it would cost too much anyway) and by the acquisition of OTM, de facto, they are buying market share on the cheap and we shouldn’t let them.
OTM.com, over the past ten years, has probably spent almost the present bid of £100 million to promote itself and to build up a substantial presence in the market today and by acceptance of this bid, CoStar seem to be paying nothing for the goodwill attached to the company.
Notwithstanding the foregoing, as a subscriber, rather than shareholder to OTM, the rocket propulsion that will come from a wealthy partner such as CoStar would transform the future destiny of OTM and stand a real chance of displacing Rightmove from its current, unassailable position. Hence, the drop of 20% in its hitherto rock-solid share price since the announcement yesterday.
The Board of OTM need acceptance of 75% of the existing shareholders for the bid to succeed and may I recommend that if you are an original shareholder of the company, and pondering the way forward, acceptance of these terms is a surrender to an incredible future opportunity. Don’t sleepwalk into acceptance.
This could be the greatest opportunity lost since ‘Decca turned down the Beatles’.
I have to confess that I was a main board director of PrimeLocation.com which was undersold to DMGT for £50million in 2006, and therefore, we lost the opportunity to benefit from a great deal more capital gain by staying in the game. Had we done so, we would have benefited from the ultimate sale of Zoopla for £2billion some years later, to a venture capitalist.
Let history not repeat itself.
Read Part One: Offer of £100 million for the share capital of OnTheMarket.com by the CoStar Group