Zillow Inc. announced today that it has entered into a definitive agreement to acquire Trulia Inc.
According to Zillow, the $3.5 billion stock-for-stock transaction approved by the Boards of Directors of both companies is expected to close in 2015. At closing, Trulia CEO Pete Flint will remain as CEO of Trulia and report to Zillow CEO Spencer Rascoff. Rascoff and a second member of Trulia’s Board of Directors will also join Zillow’s board, which will oversee the combined company.
The agreement is subject to conditions, including the expiration of U.S. antitrust waiting periods and shareholder approval of both companies. Zillow says other operational and organizational details will be announced at closing.
Zillow and Trulia are primarily media companies that generate most of their revenue through advertising sales to real estate professionals. Zillow says it has room to grow, noting in a media release that the two companies’ combined revenue currently represents less than 4 percent of the estimated $12 billion real estate professionals spend on marketing each year.
“The merger of the two companies means that they’ll now have, I guess, a stronghold on the Internet business,” says Rei Mesa, president and CEO of Prudential Florida Realty headquartered in Sunrise, Fla. “I’m not too concerned because the genies were let out (of the bottle) years ago when we, as an industry, allowed third-party portals to access our listings.”
However, Mesa does not see a problem with the Zillow-Trulia acquisition beyond an additional marketing expense.
“It probably means increased fees, especially since the second part of the equation has been eliminated,” Mesa says. He thinks there is still room online for other third-party portals, however, and that others will come in.
“My first reaction is that there’s going to be fear from those who don’t (understand the change), but our industry is 100% person-to-person,” adds Bruce Elliott, a Realtor with Regal Real Estate Professionals in Apopka, Fla. “It’s only going to make our industry better because it’s going to take a person to interpret what buyers see.”
In June, Zillow reported 83 million unique users across mobile and web. For the same month, Trulia reported 54 million monthly unique users across its sites and mobile apps. Zillow says they have limited customer overlap right now, so the acquisition will expand their reach. Zillow claims that about half of Trulia.com’s monthly visitors don’t visit Zillow.com, and two-thirds of Zillow.com’s monthly visitors do not use Trulia.com.
After the merger, Zillow says it will keep the Trulia name and maintain two distinct consumer brands, noting it “will allow the combined company to continue to offer differentiated products and user experiences, attract more users and maximize the distribution of free content across multiple platforms, apps and channels.”
“The potential for more leads just grew, says Christine Hansen, broker-owner, Century 21 Hansen Realty in Fort Lauderdale. “For those agents who are paying for enhanced leads, this could be a windfall.”
http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=311442
