Seeking a stronger foothold in the New York market, Zillow, the national real estate website, has agreed to acquire StreetEasy for $50 million in cash, the companies announced today.
“Simply put, StreetEasy has cracked the code in New York,” said Spencer Rascoff, chief executive of Zillow, 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.”
StreetEasy, launched in 2006, is best known for its sales and rental listings. The company, which employs 34 people, boasts approximately 1.2 million unique users per month, numbers driven largely by home buyers and apartment hunters.
“At StreetEasy, we pride ourselves on bringing much-needed transparency to the New York City real estate marketplace, and being the primary reference site for consumers and real estate professionals,” Michael Smith, co-founder and chief executive of StreetEasy, added in the statement.
Shortly after the acquisition was announced, questions about the valuation of StreetEasy surfaced. “They’re paying $50 million dollars for about 1 million users, and that’s a little expensive,” James Cakmak, analyst at Telsey Advisory Group, told Bloomberg.
Separately, Zillow announced it plans to offer 2.5 million shares of Class A common stock with an additional 2.52 million shares of Class A shares to be sold by existing shareholders. The company will use proceeds of the offering for general corporate purposes, including sales and marketing activities, capital expenditures and acquisitions, according to a statement. It is likely that Zillow will use the offering to help fund the acquisition of StreetEasy, Mr. Cakmak noted to Bloomberg.
Shares in Zillow traded down over 7 percent during today’s session, closing at $84.74 per share.