Trulia is making its biggest bet yet. And it is doing so in Zillow’s backyard.
Today, Trulia announced a plan to purchase Kirkland-based Market Leader for $355 million — an 18 percent premium over Market Leader’s stock close on Tuesday. The deal also values Market Leader — originally founded in 1999 as HouseValues.com — at about $100 million more than its $257 million Tuesday market value.
The acquisition is a bold move, putting San Francisco-based Trulia in direct competition with a number of online customer relationship and lead generation tools that Zillow has been rolling out in recent months. It also could, essentially overnight, make Trulia bigger than its longtime rival in several key areas.
“Market Leader stands alone as a clear leader in the highly fragmented real estate software sector,” said Trulia CEO Pete Flint in a statement.
The deal will also give Trulia a large beachhead in the Seattle tech market — a hotbed for innovation in online real estate. Market Leader employs about 285 people, and those staffers will be staying on if the acquisition is approved. Market Leader CEO Ian Morris plans to remain in charge of the Market Leader subsidiary, serving as president.
Trulia employs 550 people, and a spokesman said that it will continue to hire in both locations.
Zillow previously said that it has about 700 employees, meaning the combined Market Leader-Trulia could be larger in sheer workforce. It’s too early to say how Trulia, whose stock, like Zillow’s has more than doubled in value in the past year, will be valued on Wall Street when the markets open Wednesday morning.
On Tuesday, Trulia boasted a market value of $950 million, while Zillow was valued at $2.1 billion.
I’ve postulated over the past year that Market Leader, whose revenue grew by 30 percent last year to $45 million, could be an attractive target for Zillow. But it appears that Trulia, which in March said it planned to use cash from a secondary offering for acquisitions, wanted to accelerate its own push into online marketing tools for real estate agents. (Previously on GeekWire: “Market Leader and Zillow are on a collision course in real estate”)
Together, the combined company will have more than 46,000 premium subscribers — which Trulia says is more than any other online real estate company. It will also bring Trulia, a consumer-oriented site with 31 million unique visitors, a full slate of tools used by real estate professionals. Market Leader customers include Century 21 Real Estate; Better Homes and Gardens Real Estate; and Keller Williams Realty International. In the case of Keller Williams, Market Leader provides online marketing and customer management tools to about 80,000 real estate professionals, helping them convert solid leads into new business.
In a conference call, Trulia’s Flint called Market Leader’s online tools the “operating system” for real estate, “central to everything the agent does.” The deal, he said, will help agents drive more leads and generate new business. And with a combined 300 sales professionals across both organizations, Flint said they see tremendous opportunity to cross sell products.
Tools to make the real estate professionals’ jobs easier has been a huge push for Zillow in the past year as it has gobbled up no fewer than a half a dozen companies.
The deal follows an earnings announcement by Zillow on Tuesday in which it posted record revenue of $39 million, but a net loss of $3.7 million. Zillow CEO Spencer Rascoff repeatedly said that the company would be “stepping on the gas” in order to take advantage of opportunities.
We’ve reached out to Zillow for comment, and we’ll be tuning into Trulia’s conference call this morning for more details on the deal.
Zillow and Trulia have developed a fierce rivalry over the years. With Market Leader heading to Trulia, this saga could get even more interesting.
In a conference call this morning, no reference was made to Zillow. However, Trulia CFO Sean Aggarwal noted that the 46,000 premium subscribers makes the company “significantly larger than the next player in the industry.”
GeekWire Follow-up: Q&A: Trulia CEO Pete Flint says Market Leader is ‘the operating system’ of real estate
Here’s the full release:
SAN FRANCISCO, CA & KIRKLAND, WA—MAY 8, 2013—Trulia, Inc. (NYSE: TRLA, “Trulia”), a leading online marketplace for homebuyers, sellers, renters and real estate professionals, announced today that it has entered into a definitive agreement to acquire Market Leader, Inc. (NASDAQ: LEDR, “Market Leader”), a leading provider of Software as a Service (SaaS)-based customer relationship management (CRM) software for the real estate sector, for approximately $355 million, or an implied price of $11.33 per share (based on Trulia’s closing share price on Tuesday, May 7, 2013). Market Leader’s shareholders will receive $6.00 in cash and 0.1553 shares of Trulia’s common stock for each share of Market Leader common stock under the terms of the agreement that was unanimously approved by the boards of directors of both companies. The purchase price represents an 18% premium to Market Leader’s closing share price of $9.61 on Tuesday, May 7, 2013.
“Our acquisition of Market Leader will create unprecedented value for our customer base while also accelerating our growth,” said Pete Flint, Chief Executive Officer of Trulia. “Marrying our 31 million – and increasing – monthly unique visitors with Market Leader’s robust offerings and extensive partnerships with leading real estate franchisors and brokerages creates a company that will play an even more integral role driving value to the real estate industry. Together, we will help brokerages and franchisors enhance the productivity of their agents by offering them the most comprehensive, end-to-end solution via web and mobile devices. Our combined platform also will enable agents to increase their follow-up capabilities, engagement with clients and the return on investment on their leads.”
A real estate industry leader for more than a decade, Market Leader partners with major real estate brokerages and franchisors to help their agents build their personal reputations, manage their leads, and ultimately convert those leads into closings. Market Leader is a rapidly growing company and its products are complementary to those offered by Trulia.
“Market Leader has great products for agents, brokerage companies, and franchise organizations and is an excellent strategic fit for Trulia,” said Mr. Flint. “Market Leader stands alone as a clear leader in the highly fragmented real estate software sector. The company has an existing and proven revenue stream that grew approximately 32% in 2012, the second consecutive year of growth of over 30%. The combination also offers numerous opportunities to cross-promote the two companies’ products, deliver integrated products and services, and leverage complementary sales teams and processes. We are also executing this acquisition at what we view as an attractive valuation for both companies’ shareholders, while retaining sufficient financial capacity to pursue additional growth initiatives.”
The transaction will result in a combined platform that creates value for the entire real estate market, from consumers to brokerages, agents and franchisors.
Benefits for Franchisors and Brokerages:
- · Today, Market Leader and Trulia each have deep partnerships with hundreds of real estate brokerages and franchisors. Market Leader’s SaaS solution allows franchisors and brokerages to provide leading-edge productivity and daily workflow tools to their agents, while Trulia’s broker and franchisor partnerships help agents close more business by promoting their listings and generating leads from Trulia’s transaction-ready consumer audience.
Benefits for Real Estate Agents:
- · Real estate agents will now benefit from the industry’s first end-to-end solution. As the Trulia and Market Leader products integrate over time following the acquisition, agents will have unmatched data, combined with leading edge tools for working with consumers to help them find the home of their dreams. Agents that use the combined platform will realize that every lead will become more valuable and the agent will have greater visibility into the value of the lead.
Benefits for Consumers:
- · Real estate consumers will benefit from improved responsiveness and better service from the agents with whom they work. Trulia anticipates that increased agent responsiveness will result in more consumer delight on Trulia’s web and mobile properties.
“Attracting buyers and sellers and servicing them from research to closing in today’s market requires agents to have the most comprehensive end-to-end solution available on the web and mobile,” said Market Leader President and Chief Executive Officer Ian Morris. “Market Leader and Trulia have highly complimentary offerings and cultures and we believe this combination will be a big win for our customers, our employees, and our shareholders. The Market Leader team and I are excited to join Trulia and jointly pursue the many growth opportunities before us.”
The acquisition is subject to the approval of the holders of a majority of the shares of Market Leader’s common stock, as well as customary closing conditions, including regulatory approvals. The transaction is expected to be completed during the third quarter of 2013. J.P. Morgan is acting as the exclusive financial advisor to Trulia and Wilson Sonsini Goodrich & Rosati is serving as legal counsel. GCA Savvian Advisors, LLC is acting as the exclusive financial advisor to Market Leader, with Perkins Coie LLP serving as legal counsel.
The combined company will be headquartered in San Francisco, CA, with the Market Leader offices in Kirkland, WA continuing to be innovation and sales hubs for SaaS-based CRM. Market Leader will operate as a wholly-owned subsidiary of Trulia.
Conference Call Details
Trulia will hold a conference call on Wednesday, May 8, at 8 a.m. Eastern Time to discuss its planned acquisition of Market Leader. Pete Flint, Chief Executive Officer, and Sean Aggarwal, Chief Financial Officer, will host the conference call.
The live webcast of the conference call will be available on the Trulia Investor Relations website at http://ir.Trulia.com/. A live dial-in will be available at 866-318-8619, or internationally at 617-399-5138, using passcode 38065785. Following the completion of the call, a recorded replay of the webcast will be available on the Trulia Investor Relations website for one year. A telephone replay of the call will be available at 888-286-8010, or internationally at 617-801-6888, using passcode 49268308, until May 15, 2013.
About Trulia
Trulia, Inc. (NYSE: TRLA) gives home buyers, sellers, owners, and renters the inside scoop on properties, places, and real estate professionals. Trulia has unique info on the areas people want to live that can’t be found anywhere else: users can learn about agents, neighborhoods, schools, crime, commute times, and even ask the local community questions. Real estate professionals use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyper local advertising services, social recommendations, and top-rated mobile real estate apps. Trulia is headquartered in downtown San Francisco. Trulia is a registered trademark of Trulia, Inc.
