) announced an agreement to acquire HotPads - a rental and real
estate search site. The purchase consideration of this deal,
which amounts to $16 million, will be paid in cash. The
acquisition is projected to close by year end, subject to
customary closing conditions.
San Francisco-based HotPads is a reputable real estate website
and also has five mobile applications for smartphones. The
company was launched in 2005 and currently has 19 employees. The
company will be merged into the Zillow Rental Network after the
acquisition and will continue to operate from San Francisco.
HotPads has significant web traffic, which will substantially
boost Zillow's prospective clientele. The site recorded about 2.8
million visitors in October 2012, of which almost 70% viewed
listings for homes or apartments available for renting. Thus, the
acquisition is expected to boost Zillow's rental business.
Moreover, HotPads caters primarily to the younger population,
who are at the starting-point of their real estate life cycle.
Thus, the acquisition will make Zillow more appealing to this
client base. Moreover, HotPads' engineering team is well-versed
with the online search habits of clients, which should help
Zillow attract more clients.
Both the above-mentioned companies share the goal of providing
people with adequate means and information to hunt for a suitable
home. Toward this aim, Zillow is trying to enhance its rental
offerings. Apart from HotPads, the company has acquired various
other entities to widen its portfolio of marketing and business
services for local professionals.
Earlier this month, Zillow announced its plans to acquire
Mortech Inc. - a company that offers software tools required in
the mortgage industry. Last month, the company purchased internet
and phone-based shopping platform - Buyfolio. Before that, in
June, Zillow purchased RentJuice, which formed the basis for the
creation of Zillow Rentals.
Apart from inorganic growth, Zillow also tries to innovate and
offer new services to its customers. For instance, the company
launched a free marketplace and product suite for rental
professionals last month. The product offering includes listing
on the Zillow Rental Network, which is the largest web-based
Zillow currently carries a Zacks #3 Rank (short-term Hold). We
maintain a long-term Neutral recommendation on the stock. Peer
Market Leader Inc.
) also carries a Zacks #3 Rank.
MARKET LEADER (LEDR): Free Stock Analysis
ZILLOW INC (Z): Free Stock Analysis Report
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