Zillow will buy rival real-estate listings company Trulia for $3.5 billion in stock, creating a massive repository of online listings for real estate and home values. The two companies have competed for much of the last nine years, but the announcement Monday brings an end to the competition.
Under the deal, Zillow will pay 0.444 of one of its shares for each share in Trulia, reports the New York Times. Based on closing prices from Friday, the takeover bid is worth $70.53 a Trulia share, or about 25 percent.
Zillow chief executive Spencer Rascoff told the Times by telephone, “The companies know each other very well. We’ve been competitors and rivals for nine years, but I’ve always had respect for them.”
The two companies already dominate traffic for online home listings. While Zillow reported 83 million users across web and mobile internet use last month, Trulia reported 54 million. Those numbers equal a combined total of 61 percent of internet users for the category.
The Wall Street Journal notes that, since their launch, the sites have become strong partners and competitors in the real estate industry. They work by aggregating listings from local multiple-listing services. Real estate agents can pay to have their contact information appear beside the listings.
Rascoff explained that, while Zillow helps the market with its “Zestimates” of how much properties are worth, Trulia focuses on tools that draw more of an audience for potential home sellers. The difference has led to little overlap over the years, with about half of Trulia’s users never visiting Zillow.
The Zillow CEO added that he approached Trulia with an offer six weeks ago and, while the company expressed its disinterest in selling, it was curious what Zillow had in mind. Trulia’s managements team ultimately decided to negotiate, though they requested the deal be all-stock to help shareholders benefit from the merger.
Existing shareholders will own about a third of the combined company and Peter Flint, Trulia’s chief executive, will stay on and report to Rascoff. Flint and another Trulia director will join Zillow’s board.
Rascoff told the Times that he doesn’t expect the merger to have any issues with antitrust regulators because the revenue of the combined company is a small part of the amount the real estate industry spends on marketing each year.
The two companies expect to realize about $100 million in cost savings by 2016, thanks to the merger. The newly enlarged Zillow will have a larger platform for sellers and real estate agents to list home offerings.
[Image by Zillow]