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Nine shareholders in line for $780m dividend from Domain sale

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May 9, 2025

By Sam Buckingham-Jones

US real estate giant CoStar has agreed to buy property sales portal Domain in a $3 billion deal that will create a more powerful, cashed-up competitor to News Corp’s REA Group, and deliver a windfall to Nine Entertainment shareholders.

After almost six weeks of due diligence, CoStar has agreed to pay $4.43 a share for Domain. This is a 60 per cent premium to the price Domain was trading at before CoStar first expressed interest in the business in February.

Domain’s controlling shareholder Nine said it supported the sale and told investors it would receive $1.4 billion for its 60.1 per cent stake. Nine expects to give roughly half of that – 47¢ to 49¢ a share, or about $777 million – back to shareholders as a fully franked special dividend.

CoStar chief executive Andy Florance, who flew to Australia on his private jet several times to personally oversee the negotiations, said his company had a track record of building online marketplaces and saw an opportunity to “enhance the Australian property market”.

“By combining Domain’s deep expertise with our global experience and best practices, we will build a more compelling user experience at a lower cost – driving greater value for agents, vendors, and home buyers,” he said in a statement.

“We are confident this acquisition will foster more competition in Australia.”

Florance said CoStar, which is listed on the Nasdaq and has a market cap of $US32 billion ($50 billion), would build a better user experience at a lower cost and apply lessons from Domain to its international residential real estate platforms http://Homes.com in the US and OnTheMarket in the UK.

CoStar bought 16.9 per cent of Domain on February 21 before lobbing an initial bid at $4.20 a share, which it later increased. The acquisition will go to a shareholder vote in mid-August.

Nine, which owns the Nine Network, streaming service Stan, radio stations including 2GB and 3AW and publishing assets The Sydney Morning Herald, The Age and The Australian Financial Review, has struggled to grow Domain on par with REA, which is majority-owned by the Murdoch family-backed News Corporation.

REA has grown its market capitalisation 163 per cent to $33 billion over the past five years. Domain has grown 50 per cent during that same period to $2.7 billion.

Nick Falloon, Domain’s chairman, said CoStar’s interest was “an endorsement of the strong fundamentals” of the company he had led for the past eight years.

The sale of Domain means Nine’s market capitalisation will likely fall below $1 billion. Nine told investors the proceeds would strengthen its balance sheet and position it to look for growth areas – “both organic and inorganic”.

Domain’s shares rose 11¢ to $4.36, while Nine’s shares increased 7 per cent to $1.60. REA’s shares fell $3.87 to $246.21. (AFR)

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Real estate portal Domain the ultimate fixer-upper for Nine’s board

It’s Australia in 2024, and property is (still) king. Getting the one-time growth engine firing again would make for some very happy shareholders.

It’s tough being second. Nobody knows that better than Domain, the real estate listings platform that is 60 per cent owned by Nine Entertainment. Domain’s market performance has lagged its rival, News Corp-backed REA Group, for years – something Nine’s board has long grappled with.

Could now finally be the time for decisive action to get Domain firing again?

Domain hit the ASX in November 2017, having come a long way since Fairfax Media (now part of Nine) bought the company from Antony Catalano, the real estate journalist turned media executive who stayed on to run the listed group. At the time, it had a market capitalisation of some $2.2 billion. It was the “most nerve-racking and exciting day of my life,” Catalano, better known as The Cat, said at the time.

Now, Domain has a valuation of $1.9 billion. It has disappointed as Nine’s growth engine, and fallen increasingly behind REA Group, which is worth $28 billion. Despite this, Domain accounts for about half of Nine’s own market capitalisation, even if it makes up 21 per cent of earnings.

Nine’s main commercial media rival, News Corp, this month began to deal with its own problem child, pay-TV operator Foxtel. News has put Foxtel on the auction block even though any chance of selling it for anything other than a bargain are close to zero.

Domain is in much better shape than Foxtel in many ways. But is it time for Nine’s new chairwoman, Catherine West, to be similarly bold? It certainly is a hot topic for many in the media.

The problems at Domain have compounded over the years. Investors grumble there has been too little turnover at board level and an overly cautious approach to strategy.

But a sale of Domain is no panacea. Besides, that would leave the Nine board pondering where to redeploy the proceeds. It’s Australia in 2024, after all. Real estate is (still) king.

MST Marquee’s Fraser McLeish is one analyst who believes Nine remains Domain’s logical owner. The business is “a good number two up against a really strong competitor,” McLeish says. “It does make sense for Domain to have a media partner draw more audience to Domain, which is what Nine does, and Nine can use the data.”

And that could leave Nine looking at the opposite of a sale – going private.

Nine, the publisher of The Australian Financial Review, along with The Sydney Morning Herald and The Age, has plenty of media firepower. It has a string of AM radio stations, a publishing business which is already closely aligned to Domain, as well as a free-to-air TV business and streaming division Stan. Could better harnessing all of those assets assist Domain make up ground on REA?

Certainly, there appears to be more attention from Nine in recent months. Nine chief financial officer Matt Stanton joined the board this year, making him the third director on the Domain board appointed by the media group. Whether that triggers more board and management change is an open question.

Domain chairman Nick Falloon has chaired the group since it listed in 2017. Chief executive Jason Pellegrino, a former Google managing director in Australia and New Zealand, has run the company since August 2018.

Over the past three years, Pellegrino has moved to increased investment, spending $264 million on acquisitions, including Reabase, which helps agents coordinate marketing activity for listings, addressing some concerns that Domain has underinvested.

For the moment, Nine’s strategy is to prove that it can drive more of an audience to Domain. Having Domain back in-house could help. Buying back the remainder of a division that has been spun off to investors is unusual. But it’s possible, particularly if it is done at the right price – and with a clear plan to boost earnings.

Aside from cost savings associated with not running a listed company, going private could provide an opportunity to more closely align the businesses.

Some recall the days of building Domain, when it was owned by Fairfax and executives had their incentives linked to the real estate business’ success. Equally, much of REA Group’s early success is attributed to News Corp chairman Lachlan Murdoch’s decision to aggressively push the brand through its print and digital channels.

Domain pays Nine commercial rates for its advertising. And Nine has – unlike REA – opted to keep Domain content on websites including Financial Review, Herald and The Age.

Private equity
Nine’s board has periodically pondered the merits of taking full ownership, but buying back the business with a partner could prove even more attractive.

Last year, Nine’s bankers gauged the interest of private equity firms KKR and TPG in Domain. TPG has kicked the tyres and had a swing at buying Domain back in 2017.

In an uncertain environment, price will be key to any conversation.

But so will a financial partner recognising the need for a Domain in the local market. More precisely, it will also need to see the value in its partnership with Nine.

Longer term, Domain must prove it can grow its audience, not just its listing fees.

One of the big questions in online property sites is for how long listing revenues – often called yield – can continue to rise. Put another way, will they one day hit a peak as newspaper classifieds did and found their way to digital?

Right now, that’s not an issue for Domain. Last week, Pellegrino flagged it expects to see growth in property listings – a positive after flat listing volumes.

Further, it said it would be able to raise prices for digital listings by 8 per cent, supporting its argument that sellers see the benefit of using Domain as well as REA because it delivered different viewers. In fact, the company argues the “unique audience” Domain brings can add an extra $36,600 to a $1 million sale.

Nine’s results, due on August 28, will be closely watched. Perhaps not just by its shareholders, but by potential investors pondering whether to get in at Domain. (AFR)

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Trump, Biden reports rock chip sector

July 17, 2024

A pair of developments sparked by the current president and his 2024 challenger sent shudders throughout the chip sector today.

Why it matters: The industry most crucial to defense and the AI revolution continues to be squeezed on multiple sides — as demand continues to outpace supply.

Driving the news: Former President Trump chided Taiwan in a Bloomberg interview published yesterday for taking away U.S. chip manufacturing and using the U.S. as an "insurance policy" against China.

Overnight, a separate Bloomberg report suggested that the Biden administration is considering putting into place severe U.S. trade restrictions on advanced chip technology to China that could be imposed on several foreign-made products.

Zoom in: The administration is facing pressure from domestic companies that feel disadvantaged by existing U.S. trade restrictions. Now it's attempting to sway allies to limit their own companies from continuing to supply China with advanced semiconductor technology, Bloomberg noted.

The intrigue: Chip stocks were pummeled across the globe today (Nvidia, AMD, Qualcomm among them), alongside some Big Tech names including Meta and Apple.

The tech-heavy Nasdaq closed down 2.8% to its worst level since December 2022.

Analyst Jim Lebenthal of Cerity Partners speculated on CNBC today, however, that some investors may be using the news as an excuse to take profits.

What we're watching: ASML shares fell more than 12.7% today despite issuing better-than-expected bookings for its machines in its last quarter.

TSMC, which closed down about 8%, is scheduled to release its latest earnings report tomorrow morning. (AXIOS)

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Nvidia suffers biggest loss in world history after $646 billion bloodbath

"This is a concern"

June 27, 2024

The AI and microchip company has lost 13 per cent in valuation in the past three days.

Nvidia stock has fallen for the third consecutive day and the company has entered the history books as a result. The AI technology and microchip giant's value has seen an incredible climb since 2023 and last week became the world's biggest and most valuable company in terms of market capitalisation.

But since then it has been an absolute bloodbath. Shares dropped 6.7 per cent in value on Monday, which takes the total three-day value drop to 13 per cent, or $646 billion (USD$430 billion).

Not only was the 6.7 per cent fall the largest single-day plummet since April, but it's also the biggest three-day value loss for any company in history, according to Bloomberg.

Even with the slump, Nvidia remains up nearly 140 per cent this year, making it the second-best performer among S&P 500 Index components, behind Super Micro Computer, another favourite AI play.

The stock suffered a drawdown of about 20 per cent earlier this year, although it quickly returned to all-time highs.

While investors have flocked to Nvidia given the sky-high demand for its chips used in AI processing, the scale of Nvidia’s rally – it soared about 240 per cent over the course of 2023 – has underlined concerns about its valuation.

The stock trades at 21 times estimated sales over the next 12 months, making it the most expensive in the S&P 500 by this measure. Still, it remains well liked on Wall Street. Nearly 90 per cent of the analysts tracked by Bloomberg recommend buying, and the average analyst price target points to an upside of about 12 per cent from current levels.

“The momentum in Nvidia and AI stocks, in general, has been staggering,” said Charlie Ashley, portfolio manager at Catalyst Funds. “In terms of investing, I would not be a contrarian right now.” (AI News, Bloomberg, Wires, Yahoo!)

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