Domain Holdings (ASX:DHG) agrees to buy Realbase

Shares in Australian real estate market Domain Holdings Australia Limited (ASX:DHG) are on hold following the announcement of an acquisition and rights offering.

Domain Group shares last traded at AU$4.01 on March 31, 2022.

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Domain Holding to acquire Realbase

Domain Holdings has signed a binding agreement, through its subsidiary, to acquire Realbase Pty Ltd. Domain will pay A$180 million in cash consideration. The transaction includes a contingent payment of up to A$50 million, which will be paid if specific financial performance targets are met. The initial consideration will be paid by way of a rights offering.

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Realbase is a campaign management technology platform in New Zealand and Australia that offers services to real estate agents.

Domain marked the acquisition of Realbase as a crucial step in the evolution of its market strategy and listed the many benefits it expects to enjoy after the acquisition closes. Here we have discussed a few.

With this transaction, the impact and scale of Domain’s agent solutions unit is expected to accelerate significantly. In addition to this, the acquired entity provides a complementary market offering that will help create a holistic end-to-end solution for real estate agents. Domain said it expects to more than double agent solutions revenue in fiscal 2022. In addition, the acquisition increases Domain Holdings’ market coverage from more than 35% to more than 50%.

Realbase’s strong management team will continue and should play a crucial role in accelerating the synergy and self-sustaining growth of the business.

Jason Pellegrino, CEO of Domain, said of the development,

Domain did not update its ongoing FY22 cost forecast after the acquisition announcement, but advised that spending would increase in FY22.

Rights offering announced by Domain Holdings

Domain Holdings announced a fully subscribed rights offering to raise A$180 million to fund the acquisition of Realbase. Approximately 47.4 million new Domain shares will be issued under the rights offering at a price of A$3.80 per share.

The Company will open the lien offering on April 8, 2022 and will close on April 28, 2022.

Nine Entertainment Co Holdings Limited owns 59.03% of Domain shares and has expressed support for the acquisition. Nine has declared that it will participate in the rights offering and has agreed to under-guarantee the retail and institutional tranches of the rights offering up to 18.9 million.

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