July 29, 2014 | Updated 12:24pm

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Wednesday, July 16, 2014, 11:40am

Realogy Acquires ZipRealty For $166M

Realogy Holdings Corp., parent company of Coldwell Banker, Century 21, ERA Key and Sotheby's International, has acquired online-centric brokerage ZipRealty Inc. for approximately $166 million in a deal announced Tuesday by the companies. The all-cash transaction values ZipRealty at $6.75 per share.

With this transaction, Realogy will be acquiring ZipRealty's residential brokerage operations with 23 offices across the United States, as well as its real estate technology.

The deal will allow Realogy to leverage Zip's brokerage technology platform, Richard A. Smith, Realogy's chairman, CEO and president, said in a statement. Zip had recently begun offering it as a white-label solution for competing brokers.

Zip, founded in 1999 as a discount online brokerage, has long had a well-trafficked website but was hard-hit by the housing crash, pulling out of a dozen markets and shedding half its agents between 2010 and 2012. Zip Realty's shares more than doubled on the news, rising to $6.71 this morning after closing out the day Tuesday at $3.02. The deal is expected to close in the third quarter of 2014.

Realogy intends to merge 17 of Zip's existing brokerage offices into Coldwell Banker offices, while continuing to operate the remainder as stand-alone offices. Post-acquisition, NRT will have approximately 44,400 independent sales associates. Realogy intends to maintain ZipRealty's existing headquarters in Emeryville, Calif., to further product development.

Lanny Baker, the current president and CEO of ZipRealty, will continue in an executive leadership role within Realogy after the transaction closes, reporting to Alex Perriello, president and CEO of the Realogy Franchise Group.

"We expect the acquisition of ZipRealty to drive incremental revenue for our company-owned, franchise and title business segments," Anthony E. Hull, Realogy's executive vice president, chief financial officer and treasurer, said in a statement."We are acquiring a residential brokerage operation that, after operating efficiencies, we anticipate will contribute meaningful earnings at an attractive valuation. We also expect that the upfront and ongoing costs associated with the enhanced technology made available to our franchisees will generate attractive returns. While deleveraging our balance sheet remains a very high priority, this unique transaction represents our opportunistic approach toward enhancing shareholder value through accelerated long-term growth."

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