CoStar Seals $2.8 Billion Deal for Domain Holdings as Global Property Portal Battle Intensifies

CoStar Seals Domain Acquisition: Strategic Gambit Reshapes Global Property Portal Landscape

In a decisive move that reverberates across the global real estate technology sector, CoStar Group has officially secured its acquisition of Domain Holdings Australia through a binding scheme implementation deed signed late Thursday, valuing the Australian property portal at approximately A$2.8 billion (US$1.9 billion).

The all-cash transaction, offering A$4.43 per share to Domain shareholders, marks the culmination of a three-month courtship that began with CoStar's strategic accumulation of a 16.9% stake in February and represents a substantial 42% premium over Domain's pre-approach trading price.

"This acquisition establishes CoStar as a genuine global player in residential property portals across three continents," said an industry analyst who has followed CoStar's expansion strategy. "It's no longer just a commercial real estate data company – this completes its transformation into a full-spectrum property marketplace operator."

For Nine Entertainment, which holds approximately 60% of Domain shares, the deal promises to deliver a windfall of roughly A$1.4 billion in readily deployable capital – funds that could substantially reshape Australia's media landscape through debt reduction or strategic acquisitions.

Strategic Calculus: From Data Provider to Global Portal Empire

The acquisition represents CoStar's most significant international expansion yet, building upon its 2023 purchase of UK-based OnTheMarket for US$198 million and securing an immediate foothold in one of the world's most profitable property advertising markets.

Australia's property portal ecosystem commands an estimated 55% take-rate of the country's annual A$7 billion property marketing expenditure – widely considered the highest globally. Domain alone generated A$217 million in revenue during the first half of fiscal year 2025, representing a 7.4% year-over-year increase despite relatively flat property listing volumes.

Financial analysts calculate that CoStar is acquiring Domain at approximately 11 times projected FY2025 EBITDA, a more favorable valuation than the 15-18 times multiple it paid for OnTheMarket and significantly below Zillow's current trading multiple of roughly 20 times earnings.

"The relative bargain pricing reflects two realities," explained a senior equities strategist at a major investment bank. "First, the Australian dollar's weakness against the US dollar creates an attractive entry point. Second, Domain has persistently struggled with scale disadvantages against REA Group, making this an opportune moment for Nine to monetize its stake."

CoStar's acquisition approach mirrors its deliberate expansion strategy into residential portals, having previously transformed from a commercial property data provider into a multi-faceted real estate technology conglomerate. Its recent US$1.6 billion acquisition of Matterport, a 3D virtual tour technology company, provides ready-made technology assets to integrate into Domain's platform.

Deal Timeline: From Initial Stake to Binding Agreement

The transaction's development has unfolded methodically since February:

• February 20, 2025: CoStar acquires a 16.9% stake in Domain at A$4.20 per share
• February 21, 2025: CoStar submits an unsolicited, non-binding indicative offer at the same price
• March 26, 2025: CoStar improves its offer to A$4.43 per share, describing it as "best and final"
• March 31, 2025: Domain grants exclusive due diligence access for four weeks
• April 28, 2025: Exclusivity period extended to May 12
• May 8-9, 2025: Binding scheme implementation deed executed

Domain's share price surged approximately 70% year-to-date following the initial acquisition news, though it has settled at A$4.25, nearly 4% below the offer price – reflecting lingering uncertainty around regulatory approvals.

"The spread between current trading and the offer price suggests the market assigns roughly a 30% probability that regulators could derail the transaction," noted a veteran mergers and acquisitions specialist. "While the deal structure is clean, the foreign ownership and competition implications create meaningful regulatory hurdles."

Regulatory Gauntlet: FIRB and ACCC Scrutiny Awaits

Despite the binding agreement, the transaction faces significant regulatory scrutiny before reaching completion. The Foreign Investment Review Board must approve the acquisition of a prominent Australian media asset by an American corporation – a process with historical precedent for complication.

"Zillow's attempted approach to Domain in 2018-19 reportedly encountered resistance from FIRB on national interest grounds," recalled a regulatory affairs consultant familiar with Australian media ownership rules. "However, CoStar's existing Australian office presence and potential job creation commitments might ease this pathway considerably."

Simultaneously, the Australian Competition and Consumer Commission has already been investigating the property portal sector over allegations of excessive fees and market power concentration. The deal could provide leverage for regulators to extract behavioral undertakings, potentially including fee caps or data portability requirements.

The ACCC's scrutiny has intensified following public complaints from real estate agents about "price gouging," with premium urban property listings reportedly costing up to A$4,000 – a burden ultimately passed to property sellers through higher commission rates.

"This acquisition lands precisely at the intersection of two sensitive regulatory areas – foreign investment in media assets and already-concentrated digital platforms," observed a former ACCC official. "CoStar will likely need to offer meaningful concessions to secure approval, potentially constraining its ability to rapidly monetize the acquisition."

Market Impact: Winners and Losers in a Transformed Landscape

The transaction creates clear winners and introduces new competitive dynamics across multiple sectors:

Domain minority shareholders stand to receive a substantial premium on their investment, with the all-cash nature of the deal insulating them from continued volatility in advertising markets affected by economic uncertainty.

Nine Entertainment emerges with strategic optionality and financial flexibility, possessing A$1.4 billion to potentially reduce its leverage from approximately twice EBITDA to less than once EBITDA, or alternatively to fund aggressive expansion in subscription video services, where sports rights costs have escalated dramatically.

"Nine has converted an asset with inherent structural challenges into a significant war chest," remarked a media sector analyst. "This could fundamentally alter their strategic positioning against competitors like Seven West Media and News Corp Australia."

REA Group, Australia's dominant property portal and majority-owned by News Corp, faces a reinvigorated competitor backed by substantial international resources. Although its share price dropped nearly 11% following the initial acquisition announcement, industry observers believe its core advantages remain intact.

"REA maintains over three times Domain's audience reach and engagement metrics," said a digital media strategist. "What changes is the competitive pressure to accelerate technological innovation, particularly around immersive property experiences."

Real estate agents and advertisers face an uncertain future – potentially benefiting from enhanced listing technologies like Matterport's 3D tours, but simultaneously concerned about the potential for higher bundled fees from a well-capitalized number two player pursuing margin growth.

Technology Integration: Matterport as the Strategic Lynchpin

Central to CoStar's value creation thesis is the integration of Matterport's immersive 3D scanning technology into Domain's premium listing tiers. This integration potentially mirrors CoStar's successful "feature-gate then price-hike" model deployed at Homes.com in the United States.

Industry sources suggest management forecasts approximately 15% increases in average revenue per advertiser within two years of implementing enhanced visualization features – potentially generating an estimated A$35 million in incremental operating profit.

"The 3D virtual tour assets become particularly valuable in Australia's high-value property market, where buyers frequently make substantial purchasing decisions with limited physical inspection opportunities," explained a proptech venture investor. "This creates natural upsell opportunities for agents marketing premium properties."

Beyond visualization technology, the acquisition enables a cross-border inventory network, potentially routing Australian buyers of US or UK properties through CoStar's Homes.com and OnTheMarket platforms – creating high-margin international lead generation opportunities.

Broader Economic Implications: Capital Recycling and Innovation

The transaction triggers significant capital redeployment throughout Australia's media and technology sectors, with Nine Entertainment's windfall potentially fueling subsequent merger and acquisition activity in subscription video or digital advertising assets.

For property technology investors, the deal establishes new valuation benchmarks and reinforces the strategic premium commanded by market-leading platforms with network effects. The acquisition may accelerate investment in competing visualization technologies, as REA Group potentially seeks to fast-track its own immersive offering.

"We're witnessing the internationalization of what was previously a nationally-bounded sector," observed a senior property technology researcher. "The economics of property portals – high fixed costs for technology development but near-zero marginal costs for additional listings – naturally favor global scale players."

Looking Ahead: Deal Risks and Market Implications

Despite the binding agreement, market observers identify several material risks that could affect completion:

A 20% probability exists that the ACCC could block the transaction on competition grounds, though CoStar could potentially offer fee-freeze undertakings to mitigate concerns. REA Group, while a competitor, seems unlikely to actively oppose regulatory approval.

FIRB presents approximately a 10% risk of a national-interest veto, though CoStar's existing Australian presence and potential job commitments provide mitigating factors.

Economic conditions pose a 30% risk of a listings volume slump, though the all-cash nature of the transaction insulates Domain shareholders from this downside.

Integration challenges present roughly a 25% probability of execution difficulties, as this represents CoStar's first portal acquisition outside the US and UK markets.

"The aggregate risk profile suggests about a 70% probability of successful completion," calculated a merger arbitrage specialist. "The current trading spread appropriately reflects these multifaceted uncertainties."

Long-term Strategic Implications: Regulatory Reset Looms

Perhaps the most significant long-term consequence of the acquisition may be regulatory in nature. The Guardian's September 2024 investigative series on property portal fees had already placed the sector under political scrutiny, and a foreign takeover within a perceived price-gouging duopoly creates perfect conditions for enhanced regulatory intervention.

"This transaction could become the catalyst for Australia's Digital Platforms Act 2.0," suggested a technology policy expert. "The combination of foreign ownership, concentrated market power, and essential service characteristics creates a textbook case for regulatory intervention."

For property sellers and buyers, the ultimate impact remains unclear – potentially delivering enhanced visualization technologies and international exposure, but possibly at higher costs if competitive dynamics fail to constrain pricing power.

As the transaction proceeds toward regulatory review and shareholder votes, one certainty emerges: Australia's property technology landscape has been permanently reshaped, with ripple effects extending across global real estate, media ownership, and digital platform regulation.