The acquisition is an all stock deal, for the benefit of Trulia shareholders according to Trulia executive Peter Flint.
The New York Times reported on Monday that Zillow and their Chief Executive Spencer Rascoff had been working on this deal with Trulia for the past six weeks. That’s when Rascoff approached Trulia’s management team and they weren’t “immediately dismissive”.
Although apps like Homesnap continue to grow, over the last 9 years the two biggest forces in both online and mobile real estate listings have been Zillow and Trulia respectively.
“Zillow has already become one of the best-known players in the market through its widely quoted “Zestimates” of how much a property is worth, a feature particularly popular among existing homeowners. Trulia, on the other hand, has tools that tend to draw more of an audience among potential home sellers. Dealbook/New York Times reported.
In the stock only deal Zillow will pay 0.444 of one of it’s shares for each share of Trulia stock, which amounts to a takeover bid worth $70.53 per Trulia share. That represents a premium of roughly 25 percent.
The companies will not officially combine until sometime next year when the deal closes. Rascoff doesn’t expect opposition from regulatory forces because even though both companies are large online and mobile, they only represent a small portion of the $12 billion dollar real estate industry. Until the sale is complete both companies will continue to compete.
Both companies kept the merger talks extremely quiet using code words like Zebra for Zillow, Tiger for Trulia and referring to the electronic data room as “the jungle”. To many in the tech and business space the merger was a complete surprise.
The combined company expects to save $100 million dollars per year. Last year, the two companies brought in $341.2 million dollars, according to the New York Times.