Zillow Buying Trulia for $3.5 Billion

Real estate website operator plans to become the largest player in the online housing market with latest acquisition plans.
5:21 | 07/28/14

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Transcript for Zillow Buying Trulia for $3.5 Billion
Table and I'm -- -- new York -- as a financial markets to a close on Wall Street this Monday July 28. It's a story stock. -- -- mega merger Monday because first it was -- dollar tree buying rival Family Dollar for eight billion dollars and now real estate listing giants zillow making its move on Trulia the two rivals in the business that -- -- to create. And I join forces sort of break on the details the deal to bring it Yahoo! finance -- and toll Mike this through relatively quick courtship right. Yeah about six weeks ago is when the approach was initially made by -- to Trulia and -- really is very acquire in this situation even -- there. Posing -- as a merger and exchange of stock is basically the terms of the deal -- -- did happen pretty quickly I mean on paper on a spreadsheet makes all the sense in the world these two. Players basically do own. The online out kind of real estate listings portal business for access to all that digital advertising dollars and it from real estate related transactions. The big question is down the road as a going to be approved because you know in theory. They kind of dominate one sliver of the real estate business but only a small percentage of the overall. If you include online and offline. Right what else can I ask you about that because -- -- these are the two biggest names right there are so obvious and it kind of a monopolist it concerns might be braced on us. Getting to the numbers -- how much is still paying for Trulia. So is those -- were created during a half billion dollars. The terms of the deal are that truly shareholders will get. Zero point 444 shares of -- stock. In exchange for each one of their shares so that created initially a three and a half billion dollar deal valuation. It actually should be slightly higher than three and -- billion dollars now on paper. Because zillow shares did not hire over the course of the day. So that's the terms of the deal what's interesting is that it is an all stock transaction -- news of the potential. Acquisition leaked out last week there were Bloomberg News reports that they were in talks and so truly shares -- increase in fact both stocks increased last week. And now we see a confirmation the deal in it was even better. Then I think a lot of the speculators thought in terms Trulia. Well -- and now it's your to have this combined force when these two -- I'd like you said dominated a lot of online listing market there. All that traffic is a room as that for anyone else to get around this game at this point well. It's not so much room to gain but it's a matter of how much else is there already. In terms of customer access to real estate listings information and therefore real estate advertising dollars. Lot of regional players lot of individual agencies have their own. Obviously web sites you know -- zillow not to -- -- 3-D -- dot com in new York and that was an example. Of -- local. Kind of listings portal and there's lots of those all over the place so it's not so much that -- that they utterly dominate the entire business but they are by far the two biggest players to biggest national players. For sure. And so it really is all gonna come down to how do you define what this industry this is the industry. Basically all of all of house and rental listings all over the place or -- the industry just you know digital national portals online. For this stuff and now that's really what the question is uninteresting -- Here Trulia stock today -- with a huge increase is trading below. -- the implied value of the obvious shares in the merger which -- show -- shows you that investors have some skepticism that it will definitely be -- -- approved quickly. We'll have to and we'll have to wait and see if -- but think revenue product of an academic and off for the marketplace is zillow has estimates which is that very popular for existing homeowners truly is teachers. Has the favor with home sellers -- mean combined there is -- the strength in the marketplace read it -- those two. While the way as if they'll come out a third component back and we'll be able to kind of capitalize off. -- for -- -- mean look they are gonna keep truly operating as a as a vertical so it's not as if they're gonna kind of meld all together and make it one big site. They also or both into rentals and it seems like rentals is an area that both would want to get into and a lot. Bigger way because that is actually the stronger part of the housing market right now is a lot more. Turnover in terms of rentals what I think -- interest thing about it is that. -- a lot of divorce skeptical of zillow when -- when the stock first Republican became -- really hot stock and saying look. Not that many people on a given year buy or sell a home it's not like it's that huge a thriving market to get middle of but it really misses the point because there's so much research and just surfing and aspiration -- and vicarious. Kind of viewing that people do on line just to know what your neighbor's houses were to Wear yours might be worth. That it really creates a tremendous opportunity to sell advertising. Against that so it's it's not so much just that its transactional. In terms of how they make their money is basically the entire subject matter. Homes and -- Right and also got -- -- perspective this is exactly like for example consumer reports testing now. Toaster or model verses another toaster model I mean this is the largest investment that most Americans and -- -- -- -- that was -- writing this. Is a great resource what Quincy outlet with investors -- -- -- from Yahoo! finance Mike thank you so much have a benefits -- Even watch your story -- stay with abcnews.com for latest headlines I'm Dan Butler New York.

This transcript has been automatically generated and may not be 100% accurate.

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