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Seattle based Internet company Zillow, an online home and real estate marketplace, has announced the acquisition of rival company San Francisco Based Trulia for $3.5 billion.
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The $3.5 billion will come in the form of new stock to be issued by Zillow through the end of 2015. Zillow’s shares are trading at above $160 and Trulia’s stock is going for about $71 a share. Zillow first went public in 2011 and its shares have increased 400% in value since the start of 2013.
While both companies have lost money over the last 12 months, they have had a combined revenue of $400 million in that time. They earn their money by selling listings to real estate brokers.
The deal between America’s two largest online real estate firms is characterized as a merger. Trulia will continue to operate independently and its CEO Pete Flint will stay on at his job. He will become a member of the board of directors of the new combined company.
Zillow is currently number one in America in total web traffic for a company of its type and Trulia is number two. Just last month Zillow reported more than 83 million unique visitors to its site and Trulia maintains that it sees an average of 54 million unique visitors every month.
Competitors are obviously concerned with what they perceive to be a new monopolistic company which will be able to corner the real estate market. But Zillow CEO Spencer Raskoff responded to such criticisms saying, “We started Zillow as a media property, not a real-estate brokerage. We sell ads, not houses.”
Last year Zillow acquired the website StreetEasy which gives detailed information on various properties for $50 million.
Rascoff sees his company as nothing more than a middleman serving both the brokers and the consumers. “In real estate, there will always be a practitioner in the middle of a transaction, helping consumers with an infrequent, complex, and emotional transaction, ” he said.
Spencer Rascoff is the CEO of Zillow Inc., the leading real estate information marketplace. Under Spencer’s leadership, Zillow achieved record Web and mobile traffic, record revenue and record profitability. Spencer is a recognized leader in the real estate and business industry and was recently named Ernst & Young’s National Entrepreneur of the Year.
