Zillow Buys Rival StreetEasy to Corner the New York Market
In New York City, people seem always to be talking about real estate: how much they pay in rent, which neighborhoods have cheap apartments, for what princely sum their friend sold a home in a gentrifying neighborhood. Since 2006, StreetEasy has been giving New Yorkers more ammunition for these conversations with its online property listings and information.
Today, real-estate marketplace Zillow, one of StreetEasy's much larger rivals, announced an agreement to buy the seven-year-old startup for $50 million in cash. Although small, the acquisition will give Zillow an outsized advantage in the all-important New York market, where StreetEasy is the leader. StreetEasy also covers the Hamptons, Washington, D.C., south Florida, and a few other areas.
The seven-year-old company, which has 34 employees, will join Zillow as a separate unit, retaining its own brand identity. Far from absorbing the smaller company, Zillow wants to expand StreetEasy's footprint, investing in one or more mobile apps, according to The New York Times.
"Simply put, StreetEasy has cracked the code in New York," Spencer Rascoff, Zillow's chief executive, said in a statement. "They now have a local network effect where nearly every New York broker is active on StreetEasy because of the site's large audience and comprehensive data."
Zillow dropped more major news on Monday, announcing that it plans to offer 2.5 million shares of its Class A common stock in an underwritten public offering. An additional 2.52 million shares will be sold in the offering by existing shareholders. According to a news release, Zillow plans to use the proceeds of the stock sale for general purposes, though it says a portion may be used for "the acquisition of, or investment in, technologies, solutions or businesses that complement its business." Given the news of the day, it's hard not to read that statement with StreetEasy in mind.
As of Monday afternoon, Zillow was down more than six percent from Friday's close.