ZipRealty Soars 122% After Realogy Announces $166 Million Takeover

| About: Realogy Holdings (RLGY)

By Martin Blanc

Realogy Holdings Corp. (NYSE:RLGY), the nation's largest real estate brokerage, said today that it had reached an agreement to buy out ZipRealty, Inc. (NASDAQ:ZIPR) for $6.75 per share. The deal will be an all-cash transaction that values the smaller residential brokerage, ZipRealty, at close to $166 million, more than double its market value as of yesterday's closing price.

In a press release today, Realogy said the acquisition would bring in ZipRealty's unique online real estate listing platform, which has been developed with advanced technology to offer cutting edge brokerage solutions using research-driven housing data.

The deal is said to be a strategic investment to drive growth and productivity using technology, and Realogy will add the innovative ZipRealty platform to its host of brokerage brands that include Corcoran, Coldwell Banker, Century 21 and Sotheby's International Realty, to expand its services to nationwide customers.

ZipRealty generated revenues of around $75 million last year, but is yet to turn a profit. On the other hand, Realogy owns some of the most well-known brokerage franchises in the country, with over 13,600 office locations and around 247,000 sales associates. The company holds almost 18% of the market share in US residential listings, nearly double that of its closest rival Re/Max Holdings (NYSE:RMAX).

Realogy had revenues of $5.3 billion last year, which grew 12% from 2012, as the housing market inches toward a full recovery, driving up sales for real estate brokerages.

Shares of ZipRealty rose 122% to $6.7 by midday on the Nasdaq, while Realogy's stock price is up 0.9% in the same period.

Disclosure: No positions.

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