Property website Zillow to buy smaller rival Trulia for $3.5Bn

zillowU.S. real estate website Zillow is to buy its smaller rival Trulia Inc for $3.5 billion in a stock-for-stock transaction equivalent to or $70.53 per share (a premium of 25 percent based on the stocks’ close on Friday). The Boards of Directors of both companies have approved the transaction, which is expected to close in 2015.

Trulia shares were up 16 percent at $65.37 in premarket trading on Monday. Zillow shares were down 3 percent at $154.

TruliaBy operating independent consumer brands through one corporation, the companies expect to realise synergies to improve overall operational efficiency over the long-term. By 2016, management expects to achieve at least $100 million in cost savings. Their combined loss in 2013 was $30 million.

The combined company will maintain both the Zillow and Trulia consumer brands.  Trulia CEO Pete Flint will remain as CEO of Trulia reporting to Zillow CEO, Spencer Rascoff, and will join the Board of Directors of the combined company. In addition,  a second member of Trulia’s Board of Directors will join the board of the combined company.

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