Online real estate database Zillow on Monday announced USD 3.5 billion stock deal stuck with Trulia. The deal is expected to close next year.
Following the acquisition, both the companies will continue to operate under their respective brand names. According to the company, Trulia CEO Pete Flint will remain at his position following merger but he will have to report to his Zillow counterpart Spencer Rascoff.
With the merger, both the companies are hoping better opportunities for leveraging ad sales, their main source of generating revenue.
The combined revenue generated by both Zillow and Trulia is below 4 percent of the estimated USD 12 bn real estate professionals spending on the marketing.
The shareholders of Trulia will get 0.444 shares of Zillow’s Class A Common Stock for every Trulia share they own. While the shareholders of Trulia will own the combined company’s third part. The deal’s value is a 25 percent premium on Trulia’s closing price of USD 56.35 on Friday.
In a statement, 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.”
According to the acquisition announcement, Richard Barton and Lloyd Frink , Zillow co-founders, control the company’s majority of shareholder voting power by their Zillow Class B shares ownership, which carries 10 votes per share. Sources say they are set to vote their shares in favor of the merger.
“After the merger both the companies will be able to go to our advertisers with one platform,” Rascoff told the analysts.
Meanwhile, the stock prices of both Zillow and Trulia surged last week on rumors that a deal was in the offing.