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Zillow Said to Be Seeking to Buy Rival Propery Site Trulia

JUL 24, 2014 4:56pm ET
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Zillow Inc. is seeking to acquire rival Trulia Inc., people with knowledge of the matter said, in a move to combine the two most-visited U.S. real estate websites. Shares of both companies jumped.

Zillow could value Trulia at as much as $2 billion, and may pay about two-thirds of the purchase price with its own stock, said one of the people, who asked not to be identified because the information is private. An agreement may be announced as soon as next week, although talks between the companies are ongoing and may not lead to a deal.

Zillow rose more than 15% to $145.76 a share today, giving it a market value of $5.8 billion. Trulia surged 32% to $53.74 a share, giving it a market value of $2 billion.

The companies help buyers and renters find information on homes, generating revenue by charging property agents to give their listings prominence and by selling advertising. Together Zillow and Trulia had more than 85 million unique visitors in June, accounting for about 89% of all traffic to the 15 most visited real estate sites tracked by ComScore.

Katie Curnutte, a spokeswoman for Zillow, declined to comment. Matt Flegal, a spokesman for Trulia, said the company doesn’t comment on speculation.

Zillow shares have quadrupled since the start of last year, while Trulia has more than doubled, as the U.S. housing market recovers from the worst crash since the Great Depression. Home prices have jumped 26% from a March 2012 low, according to the S&P/Case-Shiller index of 20 cities. Existing-home sales climbed in June to an eight-month high as listings increased, the National Association of Realtors reported this week.

Zillow, based in Seattle, went public in 2011, followed by San Francisco-based Trulia in 2012. They compete with companies including Move Inc., which is also publicly traded, and Redfin Corp., which is backed by venture capital firms including Greylock Partners.

Trulia's revenue is expected to rise 76% this year to about $253 million, after more than doubling the previous year, estimates compiled by Bloomberg show. Last month, the company, which is led by Chief Executive Officer Pete Flint, said it would cut some jobs and take a charge in its second quarter.

Zillow's annual revenue is expected to reach about $311 million this year, an increase of about 58% over last year, the data show. The company, in partnership with Yahoo Homes, had 53.8 million unique visitors in June, compared with about 31.6 million at Trulia, according to ComScore.

"Long-term, we see this as a two-player market and evolving much like e-commerce" with EBay Inc. and Amazon.com Inc., Sean Aggarwal, chief financial officer at Trulia, said at the Bank of America Merrill Lynch Global Technology Conference in June.

He also described online real estate as a "very large category," with real estate professionals spending about $28 billion a year on marketing. Trulia and Zillow collectively are doing about $500 million to $600 million a year in revenue, he said, leaving $27 billion plus of "potential money" that could come into that realm over the next several years.

Neither company is currently profitable on an annual basis. No 3.-ranked Move had about 23.8 million visitors last month, ComScore's data show. ComScore’s data also includes visitors to Websites run by companies including Coldwell Banker and Re/Max Holdings Inc.

Zillow, led by CEO Spencer Rascoff, has been acquisitive recently, including buying Retsly Software Inc. earlier this month. Last year, the company purchased StreetEasy, a New York-oriented real estate site, for $50 million in cash.

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