SEATTLE, WA – On Monday, Zillow, Inc. (NASDAQ:Z), the largest U.S. real estate and home-related marketplace, announced that it has agreed to acquire privately-held StreetEasy, the leading real estate website in New York City, for $50 million in cash. While the deal is subject to final approval, it is expected that both side will finalize the agreement within the coming weeks.
StreetEasy attracts nearly 1.2 million unique visitors; most of them are looking for homes in the New York Metropolitan region. The acquisition will give StreetEasy the resources to invest in product development and marketing while offering Zillow a premier position in the country’s largest and most lucrative real estate market. According to Zillow CEO, Spencer Rascoff, ‘StreetEasy is an excellent strategic fit with Zillow as we share a common goal: To help consumers become smarter about real estate by communicating comprehensive, unbiased information about apartments and homes. StreetEasy is an incredibly strong and recognized brand in New York City and complements Zillow’s dominant and growing national brand. We’re delighted to welcome the enormously talented and knowledgeable StreetEasy team on board.’
Also on Monday, Zillow announced a 2.5 million-share offering of class A common stock. The company intends to use the proceeds to increase working capital and capital expenditures including the StreetEasy acquisition. The offering will be priced at $ 82 a share, roughly eleven percent lower than Friday’s closing price of $ 91.22 – the discount was seen as one of the reasons for Zillow’s eight percent drop on Monday, falling to $ 82.70 in after-hours trading.
Headquartered in Seattle, Zillow received more than 61 million unique visitors in July 2013 and operates a portfolio of platforms including Zillow.com, Zillow Mobile, and Zillow Mortgage Marketplace. The company also announced in July the departure of Bob Bemis; a former Multiple Listing Service (MLS) executive who was hired in 2012 to improve relations with brokers nationwide. While more than 120 brokers are now sending direct listing feeds to Zillow, the company has secured only three feeds from MLS during Bemis’ tenure.
According to Bemis, he is departing due to his ‘frustration with the lack of inroads we made in the MLS community.’ In recent years, the company has made a big push to receive data feeds directly from brokers and the MLS as a way to increase the accuracy and timeliness of information posted on Zillow’s website. A recent report noted that up to 17 percent of the homes listed for sale on Zillow were not listed for sale on the MLS. From his Bemis’ perspective, it might take years before the MLS starts providing direct feeds to Zillow.
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