The £2.2bn, 490p per share recommended takeover of Zoopla-owner ZPG (ZPG) looks to be in the bag with the backing of 30% shareholder Daily Mail & General Trust (DMGT).

This is reflected in the shares, which are trading very close to the offer price, up 30.3% to 489p. US technology fund Silver Lake is behind the bid, which is pitched at a healthy 30% premium to yesterday’s close.

The deal has been struck on an enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EBITDA) multiple of just over 20-times based on Berenberg’s forecast EBITDA for the September 2018 financial year. Which seems generous, although not out of step with valuations for internet-based businesses in the US.

It is also roughly in line with the consensus 2018 EV/EBITDA for Zoopla’s main rival and UK property site market leader Rightmove (RMV) at around 23 times.

RIGHTMOVE ON THE RISE

Shares in Rightmove are up 6.7% this morning to a fresh record high £49.10, building on an exceptionally strong run for the shares amid the M&A news. Could the company be targeted next?

AJ Bell investment director Russ Mould says: ‘ZPG has itself been on the acquisition trail since its IPO as founder Alex Chesterman looked to turn the business into a one-stop-shop offering for consumers to “research, fund and manage their homes”. This has involved adding price comparison and consumer finance services.

‘Zoopla itself is the number two outfit in the property site space behind Rightmove. The latter will be watching Silver Lake's intentions for Zoopla and whether it intends to launch a more concerted challenge to its market leader status.’

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Issue Date: 11 May 2018