Zillow to acquire Trulia for $3.5B in stock
If approved, the online real estate brands will live on separately but offer combined home listings for prospective buyers.
The online real estate marketplace could soon become a much different place.
Online real estate listing aggregator Zillow has agreed to acquire competitor Trulia in a stock-for-stock transaction valued at $3.5 billion, the companies announced Monday. Under the terms of the deal, Trulia shareholders will receive 0.444 shares of Zillow stock for ever Trulia share they own, giving those shareholders 33 percent ownership of the combined firm. Zillow shareholders will own the remaining 67 percent of the firm.
The deal, which is expected to close in 2015, represents a 25 percent premium on Trulia's closing stock price on Friday of $56.35.
Both Zillow and Trulia help consumers find homes and connect with real estate professionals. The websites are a place for people to seek and offer advice on buying real estate, and they also provide some mortgage tools for people seeking financing.
Both firms generate the majority of their revenue through advertising, which Zillow is using to pitch the deal to regulators who might take a closer look at how it might affect competition in the marketplace. According to Zillow, the companies' combined revenue is less than 4 percent of the total $12 billion in marketing real estate professionals spend each year.
Still, both Zillow and Trulia have become destinations for those seeking real estate. Zillow said it had 83 million unique users across its Web and mobile sites last month. Trulia was able to attract 54 million unique users. About half of Trulia's users do not visit Zillow, the companies said.
If the deal is approved by regulators, the Zillow and Trulia brands will live on separately. Trulia CEO Pete Flint will remain in his position, but he will report to Zillow CEO Spencer Rascoff. Flint and another Trulia board member will join Zillow's board of directors.
Next up for the companies is selling the deal to regulators. They've already started that process, saying that the combined firms will share more data related to the real estate market and housing trends with consumers and real estate professionals at no charge. The companies will also integrate their systems to allow for multiple listing service (MLS) listings across both sites with a single click. Advertisers, they said, will also benefit by reaching a broader audience, and the combined firms will save $100 million a year in costs by combining efficiencies.
Zillow shares are down by $7.36, or nearly 5 percent, to $151.51 in pre-market trading on Monday following the deal's announcement. Trulia shares are up in pre-market trading by 12 percent, or $6.522, to $62.87.