On February 18, 2015, Zillow acquired its competitor Trulia for $2.5 billion in a stock-for-stock transaction.
The 2.5 billion deal falls short of earlier value projections. According to Frederic Lardinois, “When Zillow fist announced its intention to take over Trulia the stock price still valued the transaction at $3.5 billion. ”
When two very similar companies merge it is often the case that positions get cut and the workforce gets consolidated to avoid redundancies. Unfortunately, the acquisition of Trulia by Zillow was no exception. There were major layoffs as the companies merged, with 350 employees losing their jobs.
The combined Trulia and Zillow will now operate under the name “Zillow Group” (Z) and began trading on the NASDAQ today.
Zillow states that it “plans to offer a shared services and marketing platform for advertisers later this year,” according to Frederic Lardinois.
This could come as a relief to some real estate agents who use both websites. Offering a shared services and advertising platform will allow real estate agents to save time and money , which may come as a great relief to some agents who spend twice the time updating their listings and advertising on the separate websites.
While shared services will be offered later this year, for now Zillow and Trulia will continue to operate separately– as they did before.
Zillow has approached most of its acquisitions this way (HotPads, StreetEasy), allowing companies to operate independently while still merging into the overall Zillow organization.
Steve Symington warns that in yesterday’s conference call Zillow CEO Spencer Rascoff pointed out that “Zillow’s contract to receive some MLS data from Listhub…expires in early April.But Zillow is building out its own services to receive listings directly from the MLS.” Trulia has worked to acquire MLS data feeds and already receives around 125 direct feeds. Trulia’s advancement in getting MLS data feeds is another reason that Zillow will benefit greatly from its 2.5 billion acquisition of Trulia.
According to Rascoff the synergy potential of Zillow and Trulia is significant and “there will be significant cost savings as a result of that.”