Zillow is taking a big bite out of the Big Apple. The Seattle online real estate company today announced that it has entered into an agreement to buy StreetEasy, the leading real estate Web site in the New York area.
It marks the seventh acquisition for Zillow, which is paying $50 million for the six-year-old company.
StreetEasy, which employs 34 people, boasts 1.2 million unique visitors per month. That’s a small chunk of Zillow’s overall traffic of more than 60 million.
But StreetEasy fills an important niche in the New York area, with CEO Spencer Rascoff telling The New York Times that it is a “better product” than Zillow for New York.
“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,” said Zillow CEO Spencer Rascoff. “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.”
In addition to the acquisition, Zillow today announced that it plans to sell 2.5 million class A shares and that certain principal shareholders — including Rich Barton, Lloyd Frink, David Beitel, Spencer Rascoff and others — also plan to offer 2.5 million class A shares. None of the proceeds offered by the existing shareholders will go to the company.
And the prospectus did not say how much cash the offering of the 2.5 million shares would bring in. However, Zillow’s shares have been soaring, up more than 214 percent this year. They fell in early morning trading Monday, dropping more than four percent.
Even so, at current levels, the stock offering could bring in another $217 million. The company is not using cash from the most recent offering to finance the purchase of StreetEasy.
Zillow, which lost money last quarter, still has a lot of cash in the bank from its previous offerings. It posted $169 million in cash, cash equivalents and short-term investments at the end of the second quarter.
So, what’s it need the new cash for?
Perhaps even more acquisitions.
Zillow intends to use the net proceeds of the offering for general corporate purposes, which may include working capital, sales and marketing activities, general and administrative matters and capital expenditures. Zillow may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement its business.