Zillow Inc. agreed to purchase Trulia Inc. for $3.5 billion in an all-stock deal designed to make the combined entity the largest in online real estate advertising.
Trulia shareholders will receive 0.444 shares of Zillow for each share of Trulia, the companies said in a statement Monday. That’s equivalent to Zillow offering $70.53 a share for Trulia, or 25 percent above Trulia’s closing price of $56.35 on July 25. Zillow shareholders will own two-thirds of the combined company; Trulia stockholders will own a third.
Trulia CEO Pete Flint will continue leading the site and join Zillow’s board. He will report to Zillow CEO Spencer Rascoff.
The deal positions a unified Zillow and Trulia to capture a larger share of digital real estate ads as more people shift house hunting onto the Web and property agents deploy more marketing dollars onto the Internet. While there are other real estate websites such as Move Inc. and Redfin Corp. that are growing, Zillow and Trulia are the top two most visited property sites in the U.S. tracked by ComScore Inc.
A combination makes sense as Zillow and Trulia are the two biggest companies in the online real estate market and have “virtually identical” business models, Tom White, an analyst at Macquarie Capital USA, said last week.