SYDNEY (Reuters) -U.S. real estate firm CoStar ( CSGP ) is preparing an A$2.7 billion ($1.72 billion) bid for Australian property classifieds firm Domain Holdings, said a person with direct knowledge of the matter.

CoStar ( CSGP ) declined to comment and Domain did not immediately respond to a request for comment from Reuters.

CoStar ( CSGP ) began buying Domain stock at A$4.20 a share on Thursday and has gained control of as much as 19% of the company, the person said.

The person declined to be identified discussing confidential information.

A term sheet seen by Reuters, which did not identify the buyer of the stock, said the suitor intended to launch a full takeover at A$4.20 a share.

The offer is a 34.6% premium to Domain's closing share price on Thursday of $A3.12.

($1 = 1.5689 Australian dollars)