Zillow acquires Trulia
With a $3.5 billion, online real estate giant Zillow will acquire rival Trulia in a, all-stock deal, Zillow announced Monday. The transaction is expected to close next year.
Under the terms of the deal, Zillow will pay 0.444 shares of its stock for each share of Trulia, a 25% markup to Trulia’s Friday closing price. The combined company will maintain both brands, with Trulia CEO Pete Flint staying in his job but reporting to Zillow CEO Spencer Rascoff.
Both companies make money by charging realtors for featured listings and by selling ads. In June, Zillow reported 83 million unique users across its mobile and web products, while Trulia reported 54 million monthly unique users. Yet the two brands have limited consumer overlap: about half of Trulia’s monthly visitors don’t visit Zillow, and two-thirds of Zillow’s consumers don’t use Trulia.
In response to an analyst question on a conference call Monday morning, Rascoff said: “I guess I’d say why not now? Both companies come at this from a position of strength, we both have a lot of momentum behind our businesses in terms of revenue growth, and traffic growth, and audience growth. We, like you, agree that this combination makes a lot of sense.”
Rascoff said he expects the two brands to continue to differentiate, with Zillow focusing on transactions and markets, and Trulia catering specifically to homebuyers, renters, and sellers.
In terms of revenue, there is plenty of room to grow: Zillow and Trulia’s combined revenue is less than 4% of the estimated $12 billion that realtors spend annually on marketing.
And there is room to save. As a combined company, Zillow and Trulia expect to avoid costs totaling at least $100 million by 2016. A major category of potential savings: avoiding redundant new hires.
Source: forbes
