Sheehan & Associates, P.L.C.

Zillow may acquire Trulia in 2015

Investors and consumers in Michigan may be interested to learn more about the proposed acquisition that may have a significant impact on real estate markets in the United States. As of June 28, Seattle-based Zillow is attempting to acquire its San Francisco-based online-real-estate-listings rival, Trulia, for $3.5 billion. Both companies' boards have approved the deal and are now awaiting approval from each groups shareholders. Zillow debuted during 2004 and went public in 2011, while Trulia's IPO was during 2012.

Zillow acquired a New York real estate website for $50 million during 2013. These companies generate income from advertising, subscription services and software that are sold to real estate agents. Zillow provides housing price estimates on more than 100 million U.S homes based on public records and local data. With a 6.9 percent error rate, Zillow claims the price can be used as a starting point in assessing the property's value.

The two companies maintain that there is minimal consumer overlap between the rival brands, claiming that almost 50 percent of people who visit Trulia monthly never use Zillow. Both brands will continue to exist if the deal is completed. The target date for closing the transaction is set for 2015. From then on, the CEO of Trulia would report to the CEO of Zillow. The CEO from Trulia would also join the combined company's board. Zillow plans to initiate $100 million in cost reductions once the acquisition is completed. News of the deal sent Zillow stock falling 2.5 percent to $154.89, while Trulia's stock increased 12 percent to $63.19 per share.

Mergers and acquisitions of this magnitude often require assistance from a business attorney. For major corporations, negotiating a sale of business is a complex process, but an attorney who is familiar with commercial law could provide guidance throughout the process.

Source: ABC News, "Zillow Buying Trulia to Build Real Estate Titan", Mae Anderson, July 28, 2014

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