Investing.com-- Shares of Domain Holdings Australia Ltd (ASX: DHG ) rose sharply on Friday after the Australian classifieds firm received a takeover bid from U.S. peer CoStar Group Inc (NASDAQ: CSGP ), with shares trading above the latter’s offer.

Domain’s shares rose as much as 48% to A$4.67 in Sydney trade, surpassing the A$4.20 per share offered by CoStar for the company, which valued Domain at about A$2.65 billion ($1.7 billion).

Domain’s shares were at a three-year high. CoStar’s offer was at an over 36% premium to Domain’s last close.

CoStar also disclosed that it had purchased 16.9% of Domain’s ordinary shares earlier this week, at A$4.20 per share. It was now extending this offer to the remainder of Domain’s shareholders.

Domain’s board said it was assessing CoStar’s proposal, and that shareholders should take no action.

Nine Entertainment Co Holdings Ltd (ASX: NEC ), which owns a 60% stake in Domain, surged 17.4%.

CoStar is an American property analytics and information firm. Its bid for Domain is likely a foray into the Australian property market, which has seen years of strong price growth amid a supply crunch in the country, especially in housing.

Domain has benefited from this boom, having last week posted a 28% rise in its half-year profit.

Investment from CoStar gives Domain more backing to compete with Rea Group Ltd (ASX: REA ), which is the biggest property website in the country. REA’s shares slid around 12% on Friday. REA owner News Corp (ASX: NWS ) slid nearly 6% in Australian trade.