Online Real Estate Firm Zillow is acquiring its rival Trulia for USD 3.5 billion in stock in the deal, which is expected to close in 2015, and value Trulia at just over USD 71 per share. Post this acquisition, the combined company will maintain both the Zillow and Trulia consumer brands, and provide listings for home and apartment sales and rentals. Also, Trulia CEO Pete Flint will remain as CEO of Trulia as well as join the board of the combined company.
Flint said that “Trulia and Zillow have a shared mission and vision of empowering consumers while helping real estate agents, brokerages and franchisors benefit from technological innovation,”.
Trulia was launched in 2004, as a venture of Sami Inkinen and Pete Flint, providing information on properties and real estate professionals for home buyers, sellers, owners and renters. It had raised five rounds of investment and secures a total funding of USD 255.1 million. The firm having five competitors as HotPads, Cyberhomes, Redfin, Loanshoppers Terabitz, Propertyslot.com and Realtor.com.
The company had acquired Market Leader and Movity and backed by six investors. Both Zillow, which went public in 2011 and Trulia, which had its stock market debut in 2012, generate revenue through advertising and subscription software and services sold to real estate agents.
“Consumers love using Zillow and Trulia to find vital information about homes and connect with the best local real estate professionals,” Zillow chief executive Spencer Rascoff said.
“This is a tremendous opportunity to combine our resources and achieve even more impressive innovation that will benefit consumers and the real estate industry.”
NDTV Gadgets says: According to Benchmark estimates, Zillow and Trulia are No. 1 and 2 in the online real estate market, followed by No. 3 Move Inc. Zillow reported nearly 83 million monthly unique visitors in June. Trulia reported 54 million.
Zillow, which debuted in late 2004, became well known for its “Zestimate” housing price estimate for 100 million homes nationwide. The number is based on geographic data, user-submitted information and public records. Zillow says the “Zestimate” has a 6.9 percent median error rate, and should be used as a starting point in determining a home’s value.
It’s not Zillow’s first expansion through acquisition. The company bought New York City-focused real estate website StreetEasy in 2013 for $50 million.
Zillow, based in Seattle, plans to save $100 million in cost cutting once the Trulia purchase is complete.
WSJ says: California Association of Realtors president Kevin Brown wrote in an email that his association had concerns that “this merger will lead to fewer choices and higher advertising costs for our members and their clients.”
Lisa Chapman Bushnell, a real-estate agent in Marco Island, Fla., said she advertises on both Zillow and Trulia and spends more than $600 per month on each in order for her contact information to appear alongside listings when consumers search the sites.
She said that both sites get her leads on buyers and that she won’t be worried about the combined company unless it leads to higher advertising prices.
The sites “have improved my production greatly,” she said.
Fox Business says: “By working together, we will be able to create even more value for home buyers, sellers, and renters, as well as create a robust marketing platform that will help our industry partners connect with potential clients and grow their businesses even more efficiently,” Flint said in a press release.
“Trulia brings us a great brand with a large audience,” Rascoff said in an interview with FOX Business. “So, Zillow already operates multiple brands…that allows us to grow our audience, which in turn, makes us more relevant to advertisers.”
BloomBerg says: “The opportunity here is very large — both companies are growing extremely fast,” said Ron Josey, an analyst at JMP Securities who rates Zillow the equivalent of a buy. “They should be able to benefit from some sort of brand awareness and the network effect just grows with this deal alone.”
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