CoStar Agrees to Buy LoopNet for $860M

Florance

WASHINGTON, DC-Locally based CoStar Group Inc. and San Francisco-based LoopNet Inc., both publicly held, have signed an agreement for CoStar to acquire LoopNet for cash and CoStar stock in a deal valued at $860 million. The transaction, which is subject to customary closing conditions including shareholder approval, is expected to close by the end of this year.

The two companies, which were once involved in lawsuits against each other but settled those suits in 2009, said in an announcement regarding the merger that the transaction will double the size of CoStar's paid subscriber base to at least 160,00, “which represents approximately 15% of the estimated one million participants in the commercial real estate market.” They said CoStar's market studies have indicated that customers view the services of the two companies as serving two very different but complementary needs and that the overlap between CoStar and LoopNet subscribers is estimated to be relatively low. “As a result, CoStar expects significant cross-selling opportunities between the two customer bases,” the announcement said.

Boyle

In addition, with LoopNet's listings, CoStar will have a database with approximately two million active listings. LoopNet.com is the industry's largest and most heavily trafficked online marketplace with 4.8 million registered members and more than six million unique visitors quarterly, according to Google Analytics. CoStar operates the largest commercial real estate information database with over 77 billion square feet of office, retail, and industrial inventory, 1.5 million listings, and 10.6 million images.

Andrew Florance, president and CEO of CoStar, said in the prepared statement that "We expect the scale, complementary service capabilities and diversified client and geographic footprint created by the combination of CoStar and LoopNet will drive significant revenue opportunities and cost saving synergies. CoStar revolutionized how the industry researches commercial real estate and LoopNet revolutionized the way the industry markets commercial real estate."

Richard Boyle, chairman and CEO of LoopNet, commented: "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. This transaction combines the capabilities and best practices of two successful and very complementary companies."