(Reuters) – U.S. real estate website operator Zillow Inc said it would buy smaller rival Trulia Inc for $3.5 billion in stock, as the U.S. real estate market continues its choppy recovery.
The offer values Trulia shares at $70.53 each — a premium of 25 percent based on the stocks’ close on Friday.
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Trulia shares were up 16 percent at $65.37 in premarket trading on Monday. Zillow shares were down 3 percent at $154.
Both Zillow and Trulia have been spending aggressively on advertising, foregoing near-term profitability, to corner a bigger share of online spending on real estate listings.
The companies said they expected the deal to help save at least $100 million per year by 2016.
Trulia shareholders will receive 0.444 common shares of Zillow for each share they hold and will own about 33 percent of the combined company, the companies said.
Trulia Chief Executive Pete Flint will report to Zillow CEO Spencer Rascoff after the deal closes in 2015.
Trulia shares jumped as much as 40.5 percent to $57 on Thursday after Bloomberg News reported that Zillow may buy the company.
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