The companies announced this morning that Zillow, the largest online real estate website, would acquire Trulia, the second-largest, for $3.5 billion in stock. As part of the deal, every Trulia shareholder will receive 0.444 shares of Zillow’s Class A Common Stock; in total, Trulia shareholders will own one third of the new combined company. The deal is expected to close next year.
Trulia CEO Pete Flint will retain his title and report to Zillow’s CEO, Spencer Rascoff. Flint and a second member of Trulia's Board of Directors will join the board of the combined company.
How Will Zillow (Z) Stock Be Affected By Its Acquisition of Trulia (TRLA)?
In June, Zillow reported 83 million unique users, while Trulia reported 54 million. The two sites have limited overlap; according to the press release, half of Trulia’s monthly visitors do not use Zillow and two-thirds of Zillow’s monthly visitors do not use Trulia.
"Consumers love using Zillow and Trulia to find vital information about homes and connect with the best local real estate professionals," Rascoff said in the press release. "Both companies have been enormously successful in creating compelling consumer brands and deep industry partnerships, but it's still early days in the world of real estate advertising on mobile and Web. This is a tremendous opportunity to combine our resources and achieve even more impressive innovation that will benefit consumers and the real estate industry."
Zillow shares fell 1.5% to $156.43 on the news.
BlackBerry (BBRY) shares fell 3% to $9.96 after CEO John Chen said that the company had no buyout offers.
Chen admitted in a Bloomberg Television interview that the company has no acquisition offers. “I don’t have any offers on my desk,” Chen told Bloomberg’s Emily Chang. “If people would like to talk, I mean, talk is not an offer.” Nonetheless, Chen said that the company would turn itself around independently, and that its chances of success were “better than 80/20.”
The CEO said in the interview that BlackBerry would be profitable by March 2016. "I am comfortable with where the company is today, how we managed our technology, our businesses, the margins, the distribution channel or the new products that's coming out," he said. "Whether it's going to be good enough to be iconic again, OK, that's something I need to chew on. I don't know the answer to that question."
Chen became CEO of the Waterloo, Ontario-based company in November. He has tried to turn around BlackBerry by cutting costs, selling property in Canada, and building revenue from business services and BBM messaging service to compensate for flagging handset sales. Shares increased 52% year-to-date until July 15, when Apple (AAPL) and IBM (IBM) announced a partnership to collaborate on business services. The following day, BlackBerry shares fell 12%.
Following the deal, UBS analyst Amitabh Passi wrote, “BlackBerry now finds itself competing against much larger and established enterprise vendors, as well as smaller, but better capitalized, vendors e.g. MobileIron (post-IPO).” RW. Baird’s William Power wrote, “This deal could be a meaningful negative for BlackBerry as it attempts to leverage its remaining enterprise clout to turn around the business.”
Twitter (TWTR) shares fell 1.3% to $37.65 ahead of tomorrow's earnings release.
Analysts polled by Thomson Reuters expect that the social media company will lose 1 cent on $283.07 million in revenue. Last quarter, Twitter broke even on earnings per share, exceeding analysts' expectations of a net loss of 3 cents per share, and beat analyst expectations on revenues; however, the stock tanked on guidance below consensus.
Analyst reports this morning were largely optimistic. Rob Sanderson of MKM Partners reiterated his "buy" rating and $55 price target. He notes that while the consensus estimate of $283 million in revenues exceeds guidance, and while he only projects $275 million, he still thinks consensus is achievable. "TWTR has very high activations, but also very high leakage after only a few tries. We see user growth improvement in two stages: (1) narrowing high attrition rates with gradual improvements, then (2) a substantial overhaul of user experience," he wrote.
Twitter reports its second-quarter earnings tomorrow after the bell.
--Written by Laura Berman in New York
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