Zillow to Acquire Trulia; both Companies to Maintain Course

Zillow, the Seattle based company which started out in the mid-2000s as a website where one could check on one's own and one's neighbor's property values and has grown to a large on-line source of information on homes for sale is acquiring another housing boom start-up, Trulia.  The purchase, which actually appears to be more of a merger, was confirmed on Monday and will give $3.5 billion in Zillow stock to the company's stockholders.  The boards of directors of both companies have approved the transaction which is expected to close next year.

The two companies are self-described as primarily media companies which generate the majority of their revenue through advertising sales to real estate professionals.  A corporate press release said that despite continued growth as public companies, "significant opportunities of scale remain as the majority of advertising dollars in the real estate sector have yet to migrate online or to mobile. For example, the two companies' combined revenue currently represents less than 4 percent of the estimated $12 billion real estate professionals spend on marketing their services to consumers each year.

The combined company will maintain the consumer brands of both entities and says it will continue to offer its real estate information free to buyers, sellers, and renters.  Zillow CEO Spencer Rascoff said, "Consumers love using Zillow and Trulia to find vital information about homes and connect with the best local real estate professionals,  Both companies have been enormously successful in creating compelling consumer brands and deep industry partnerships, but it's still early days in the world of real estate advertising on mobile and Web. This is a tremendous opportunity to combine our resources and achieve even more impressive innovation that will benefit consumers and the real estate industry."

In June, Zillow reported a record 83 million unique users across mobile and Web and Trulia a record 54 million monthly unique users across its sites and mobile apps.   The two brands have limited consumer overlap - approximately half of Trulia.com's monthly visitors do not visit Zillow.com, and approximately two-thirds of Zillow.com's monthly visitors across all devices do not use Trulia. Maintaining the two distinct consumer brands 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 acquisition agreement provides for Trulia shareholders to receive 0.444 shares of Class A Common Stock of Zillow for each share of Trulia, and will own approximately 33% of the combined company at closing.  Current Zillow holders of Class A Common Stock and Class B Common Stock will receive one comparable share of the combined company at closing, and will represent approximately 67% ownership of the combined company. Trulia CEO Pete Flint will remain as CEO of Trulia reporting to Rascoff, and will join the new company's Board of Directors.  Trulia is currently based in San Francisco.

According to the press release the merger of the two companies is expected to provide them with accelerated innovation on mobile and web platforms, greater access to free real estate market data, the ability to better provide this data to consumers and real estate professionals, broader distribution for users, enhanced value and return on investment for advertisers, and corporate cost savings.