The REA Group Ltd (ASX: REA) share price is under the spotlight after announcing an Ireland acquisition.
REA Group is best known as being the owner of real estate portal realestate.com.au. It also owns and has investments in a number of other property-related businesses such as realcommercial.com.au.
Acquisition of 35% of Daft.ie
REA Group announced to the ASX it has entered into an agreement to acquire a 35% interest of Distilled, the leading digital marketplace operator across Ireland and Northern Ireland. It owns Ireland’s number one property portal, Daft.ie.
The business also owns PropertyPal, Northern Ireland’s number one property portal. It owns DoneDeal.ie, Ireland’s number one automotive marketplace. The business owns Used Cars NI, Northern Ireland’s number one automotive marketplace and Adverts.ie, Ireland’s number one general classifieds website.
The ASX share said that the proposed investment represents an attractive opportunity for REA Group to collaborate with “highly aligned, talented partners and extend its core property strategy into a digitally mature high growth market”.
The total cost of this acquisition to buy 35% of Distilled is €248 million, or A$409 million. This will be funded from REA Group’s existing cash reserves and debt. The shares will be acquired on a pro-rata basis from current shareholders.
This proposed acquisition is expected to “modestly” add to core earnings per share (EPS) in the first year after the transaction is completed.
Distilled’s CEO and co-founder Eamonn Fallon will continue to lead the business and remain a meaningful shareholder after the deal has been completed.
Are Ireland and Northern Ireland attractive?
REA Group said both countries are digitally developed, with growing property markets with structural characteristics similar to Australia, including increasing adoption of a vendor paid advertising model.
Ireland’s “robust economy”, population growth and strong housing demand underpin a growing property market with attractive long-term fundamentals, according to REA Group.
The ASX share said that Distilled has a proven record of profitable growth and there are significant opportunities for future monetisation.
Final thoughts on the REA Group share price
This seems like a good move, though only time will tell whether it was purchased at a good price or it has overpaid.
The REA Group share price is a lot cheaper, so this could be a useful time to invest, but AI is a potential uncertainty. However, growing internationally is a good way to unlock further growth.
I think it could be a good buy for a brave investor and it could bounce back when Australia’s property market fundamentals improve.
