Zillow and Trulia, after nine years of competition in the online real estate community, have decided to merge and combine their efforts. After Zillow’s chief executive Spencer Rascoff approached his competition, with the soothing words of a spectacular merger, Trulia didn’t long remain coy, but after a mere six weeks the two decided to join. Goldman Sachs advised Zillow, as did Shearman & Sterling and Perkins Coie, while JPMorgan Chase and Qatalyst Partners advised Trulia, as did Goodwin Proctor and Wilson Sonsini Goodrich & Rosati.
The final deal gave Trulia shareholders 0.444 shares of Class A Common Stock of Zillow for every owned Trulia Share, landing a third of the company in their pocket, and giving them a 25 percent premium on Trulia’s closing price last Friday of $56.35.
Zillow’s strength rested in its appeal to buyers, what with its “Zestimates” on property worth, whereas Trulia appealed especially to home sellers. Combining the two seems like a natural fit, and will help them seek what they want, to gain leverage over ad sales, where they make most of their money.
Though they will dominate the online market, they nevertheless won’t amount to a trust, says Rascoff.
Their merged company earned $341.2 million last year, which is but a fraction of the $12 billion the real estate industry spends on marketing each year.
“This is a tremendous opportunity to combine our resources and achieve even more impressive innovation that will benefit consumers and the real estate industry,” said Rascoff, as reported by USA Today.
“Both companies are coming at this from a lot of strength and momentum,” he also said, and is enthusiastic about what their shared future may hold. Both of them have already grabbed other markets – Zillow buying Streeteasy last year and Trulia buying Market Leader last spring.
They will nevertheless remain in competition until the merger is sealed next year.