CoStar Group Inc. is acquiring the most heavily trafficked online commercial real estate marketplace, LoopNet.com, in an $860 million deal that will create a single database of 2 million active listings.
The merger, which has been approved by the boards of directors of both companies and is expected to close by the end of the year, will double the size of CoStar’s subscriber base to 160,000, and create a company with more than $300 million in annual revenue.
"CoStar and LoopNet have been at the cutting edge of innovation in their respective businesses and we believe the two companies will be even stronger together," said Richard Boyle, chairman and CEO of LoopNet Inc., in a statement. "This transaction combines the capabilities and best practices of two successful and very complementary companies."
LoopNet shareholders will receive $16.50 in cash for each share of LoopNet common stock — nearly 15 percent more than Wednesday’s closing price — plus 0.03702 shares of CoStar Group common stock, representing a total equity value of approximately $860 million, the companies said.
CoStar, which has a commitment letter from J.P. Morgan for a $415 million term loan and a $50 million revolving credit facility to fund the acquisition, expects to cut the combined companies’ annual costs by $20 million over two years through "cost synergies."
In a separate regulatory filing, LoopNet reported $1.8 million in first quarter net income on $20.7 million in revenue. The company said it had 4.8 million registered members at the end of March, including 91,147 paying subscribers. Active listing totalled 816,471, and profile views of listings totaled 76.5 million during the quarter.
LoopNet customers include Apartment Realty Advisors, Cassidy Turley, CB Richard Ellis, Coldwell Banker Commercial, Colliers International, Cushman & Wakefield, Grubb & Ellis, Jones Lang LaSalle, Lincoln Property Company, NAI Global, Newmark Knight Frank, ProLogis, The Shopping Center Group and Sperry Van Ness.
In March, LoopNet announced it would offer access to detailed property information and closed sales as stand-alone products: "Property Facts" and "Property Comps."
The National Association of Realtors, local Realtor boards, and NAR subsidiaries ePropertyData and Realtors Property Resource are also competitors in the commercial real estate listings space.
NAR subsidiary Realtors Property Resource, a parcel-based database that will be available at no charge to all Realtors, is licensing commercial property listings data from cooperating multiple listing services and Realtor Controlled Commercial Information Exchanges (CIEs), and is developing tools for commercial applications.
EPropertyData operates CommercialSource.com, which receives commercial listings from sources including California Real Estate Technology Services (CARETS), the Seattle-based Commercial Brokers Association, the Houston Association of Realtors, the Dayton Area Board of Realtors, and the Oklahoma City Metropolitan Association of Realtors.