Zillow Inc (Z) Buys Out Trulia Inc (TRLA) In $3.5B All Stock Deal

As part of the breaking news about the $3.5 billion worth real estate deal, in which $5.79 billion market capped Zillow Inc (NASDAQ:Z) bought out $2.26 billion market cap Trulia Inc (NYSE:TRLA) CNBC today asked CRT Capital Group’s Neil Doshi on his opinion on the dynamics of the transaction.

Zillow Inc (NASDAQ:Z)

Mr. Doshi commented, “We are positive on this deal. We think that at the end of the day, this provides scale. And scale, ultimately, leads to more advertising on the overall network, so we think it is positive for both Trulia Inc (NYSE:TRLA) and also for Zillow Inc (NASDAQ:Z) as well.”

Looking ahead, the analyst predicted that regulators will have a close look at the deal, but eventually he expects the deal to come through. He rationalized that, “this is a very large market and a very fragmented market. It’s probably a $10 billion market in terms of total marketing that happens by real estate agents [...] If we look at the revenue of the both combined Zillow and Trulia, it’s less than about 12 percent [of that total].”

Mr. Doshi conceded that the deal might face opposition from competitor Realogy Holdings Corp (NYSE:RLGY). He indicated that, “Probably will voice their opinion with the regulators and probably claim that there is too much power” between the merged entity and would bode ill on pricing for agents, because “online viewing will happen only on one site” going forward.

Explaining the current scenario, he indicated that Zillow Inc (NASDAQ:Z) charges roughly $300 per month, whereas Trulia Inc (NYSE:TRLA) prices its offering  in the $100 to $150 range and expects the combined entity to maintain status quo and allow agents to decide on which network, they would like to advertise.

Disclosure: none

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