zillowtrulianew1Zillow’s whopping $3.5 billion bid for rival Trulia still faces regulatory scrutiny and shareholder approval, hurdles that Zillow CEO Spencer Rascoff said he does not believe will get in the way of the company’s biggest acquisition ever.

Even so, if the deal falls apart, Zillow must pay a termination fee of $150 million to Trulia. Under other circumstances, Zillow or Trulia would have to pay a termination fee of $69.8 million, according to a SEC filing released Tuesday. In one scenario, Trulia would have to pay the breakup fee of $69.8 million if it entered into an agreement with another company for a superior buyout offer.

“We think a fee of this level is commensurate with similar deals of this size and significance,” a Zillow spokeswoman tells GeekWire.

The filing notes:

The Merger Agreement contains termination rights for Trulia and Zillow applicable upon: (a) a final non-appealable order or other action prohibiting the Mergers; (b) the eighteen-month anniversary of the date of the Merger Agreement; (c) the failure of either Zillow’s shareholders or Trulia’s stockholders to approve the Mergers by the required vote; (d) a breach by the other party that cannot be cured within 30 days’ notice of such breach, if such breach would result in the failure of the conditions to closing set forth in the Merger Agreement; (e) certain “triggering events,” including a change in recommendation relating to the Mergers by the other party’s Board; and (f) in certain circumstances, Trulia’s entry into a contract with respect to a superior proposal.

Rich Barton
Rich Barton

That last point means an outside buyer could still enter the fray, perhaps competing with Zillow’s bid.

Five years ago, Google had reportedly expressed an interest in buying Trulia, a suitor that certainly has deep enough pockets to compete with Zillow (and is intensely interested in the online advertising market).

Could Google or someone else come knocking on Trulia’s door?

As part of the merger agreement, Trulia and Zillow are not to solicit “competing proposals” during the interim period.

Zillow co-founders Rich Barton and Lloyd Frink — who are the sole owners of Zillow’s class B stock — have agreed to vote their Class B shares in favor of the merger agreement “against any proposal made in opposition to, or in competition with, the Mergers or any other transactions contemplated by the Merger Agreement, and against any action or agreement that would prevent or delay the consummation of, the transactions contemplated by the Merger Agreement,” the filing says.

Certain Trulia shareholders, representing 7.4 percent of the common stock of the company, also have agreed to vote for the merger with Zillow against any other proposal.

Barton and Frink will continue to have the majority of the votes of the company if the merger goes through as planned. They will continue to hold onto their class B shares, each of which is worth 10 votes. That compares to one vote for class A shares.

The filing also notes that the board of directors of the newly-formed company will consist of 10 individuals, eight of which are on the Zillow board currently and two of which come from Trulia. (CEO Pete Flint is in line to take one of the slots).

Previously on GeekWireZillow buying Trulia: An industry perspective… Zillow pays $3.5 billion for longtime rival Trulia… Why a Zillow acquisition of Trulia makes a ton of sense, and a few reasons why it doesn’tReal estate dominance: 5 reasons why Zillow is paying a big premium to buy Trulia

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