Trulia said the combined company will have some 46,000 “premium subscribers” — or more than “any other online real estate marketplace” (likely an indirect reference to rival Zillow).
The pair said the rational for the merger is to create a “combined platform” that covers both house buyers and real estate agents — aka “the entire real estate market, from consumers to brokerages, agents and franchisors” — with Trulia’s front end listing businesses being complemented by Market Leader’s back-end SaaS CRM.
The move is not unexpected, coming after Trulia said it was looking to raise $150 million in follow-on funding in March — with some of the money intended to be used “to acquire or invest in complementary businesses, products, services, technologies, or other assets”.
Announcing the news on its blog, Trulia CEO Pete Flint said:
We are very excited to announce that Trulia has entered into a definitive agreement to acquire Market Leader, Inc. (NASDAQ: LEDR, “Market Leader”), a provider of Software as a Service (SaaS)-based software that helps agents generate, manage, engage and market to their contacts and provides enterprise tools for franchisors and brokerages to route leads, evaluate lead efficacy, manage agent performance, and track consumer trends. This transformative deal aims to deliver unprecedented functionality and create more value for franchisors, brokerages, agents and consumers.
Commenting further in a press release, Flint described Market Leader as an “excellent strategic fit”, and talked up “numerous opportunities” for cross-promotion, integrating products & services, and sales teams & business processes:
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.
On the price-tag, Trulia said the approximately $355 million figure is 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.
Flint added that the acquisition leaves Trulia with “sufficient financial capacity to pursue additional growth initiatives”.
Adding his comments in a statement, Market Leader President and Chief Executive Officer Ian Morris said:
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. 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 close during the third quarter of 2013.
Market Leader will operate as a wholly-owned subsidiary of Trulia. The combined company will be headquartered in San Francisco.