CoStar Group, a leading global provider of online real estate marketplaces, information and analytics, has announced plans to buy OnTheMarket, the third-most visited residential property portal in the United Kingdom, for £1.10 per share in cash or approximately £100 million.
OnTheMarket was founded by agents in 2013 to provide a competitive alternative to the existing United Kingdom property portals. Since then, it has successfully developed a large network of agents and property listings by taking an agent-friendly approach. Today, OnTheMarket has over 13,000 agent advertisers and attracts high intent leads at a fraction of the cost of other United Kingdom portals.
CoStar Group is an S&P 500 and NASDAQ 100 company and is a leading global operator of property portals. CoStar’s websites drew approximately 280 million visits in September, roughly twice the monthly visits reported by UK property portal Rightmove.
CoStar Group operates one of the most successful and heavily trafficked residential portal networks in the United States with 240 million visits to Homes.com and Apartments.com in September. It has operated the top commercial property information, analytics and news site, CoStar, for two decades, as well as LoopNet, the leading commercial property portal in the United Kingdom.
CoStar Group collects information in approximately 190 countries, has clients in over 135 countries, and operates 28 property portals, investing billions.
CoStar Group has a track record of acquiring strong-performing property portals that are not the number one players and investing and building them into the most successful portals serving their market. CoStar Group acquired fifth place United States residential rental platform Apartments.com in 2014 and grew it to the number one player in the United States with revenue now approaching a billion dollars. CoStar Group recently acquired Homes.com, a sixth place residential property portal in the United States with 6 million unique visitors and turned it into the fastest growing United States residential portal with more than 100 million unique visitors in September 2023. Homes.com is now the number two most trafficked residential marketplace in the United States.
Andy Florance, founder and chief executive officer of CoStar Group, said in a statement: “We believe the acquisition of OnTheMarket represents an attractive and efficient entry point into the £8 trillion United Kingdom residential property market. We are excited to welcome the OnTheMarket team to the CoStar Group family.”
“OnTheMarket’s network of property professionals and breadth of advertiser relationships provide a strong foundation to compete with the dominant United Kingdom property portals,” continued Florance. “The combination of OnTheMarket’s large network of agents and access to listings, together with the marketplace experience and resources of CoStar Group, has the potential to create the leading agent-friendly player in the UK residential marketplace. We see OnTheMarket as an important step in expanding our Homes.com residential network not only in the UK, but across Europe. We believe the market opportunity in Europe is over $10 billion, and we intend to participate aggressively in developing and expanding our residential marketplace network.”
OnTheMarket is headquartered in London and has approximately 180 employees. Revenue for the 12-month period ending 31 July, 2023, was approximately £35 million, with adjusted earnings before interest, taxes, depreciation and amortisation of £8 million. Based on enterprise value of approximately £87 million, transaction multiples for the trailing 12-month period are 2.5x revenue and 11x adjusted EBITDA. CoStar Group intends to invest £46.5 million into sales and marketing in the first full year following the commencement of the integration of the portal into CoStar’s network of residential marketplaces.
That amount represents six times OnTheMarket’s current annual media spend and more than three times the current annual media spend of Rightmove. The sales and marketing investment is the first stage of a multi-year investment programme totalling hundreds of millions of pounds to drive more consumers to the OnTheMarket portal with the goal of significantly increasing the quantity of valuable leads to OnTheMarket’s agent clients.
Jason Tebb, CEO of OnTheMarket, said in a statement: “We are very much looking forward to joining the CoStar Group residential network. From a position of strength, the partnership will significantly accelerate our strategy with a clear target of becoming the market leader. Together we share a long history and strong commitment to agents, who will benefit from CoStar’s commitment to maintaining our fair and sustainable pricing model and greater opportunities to enhance their businesses.”
The transaction is expected to close in the fourth quarter of 2023 subject to shareholder approval and customary closing conditions. CoStar Group plans to discuss the OnTheMarket acquisition during the third quarter 2023 financial results conference call scheduled for 24 October, 2023.