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Internet real estate company Homestore.com announced Friday that it will acquire Cendant Corporation's Internet real estate portal Move.com in an all-stock deal 
valued at $761 million (US$).
When the deal is finalized, Move.com and its related assets -- including rental listing and apartment finder service Rent.net -- will be integrated into the Homestore.com network, which currently includes Realtor.com, HomeBuilder.com, SpringStreet.com and HomeFair.com.
"With this transaction, we're increasing choices for consumers nationwide while continuing to put the real estate professional center stage," said Stuart Wolff, Homestore.com's chairman and chief executive officer.
Numbers released in September by The NPD Group and Media Metrix showed that Realtor.com was the most popular online real estate site in July, with almost 2.5 million unique visitors. Tied for second place were Homestore.com and MSN's Homeadvisor.com, with 1.5 million unique visitors each.
Inside the Deal
Under the terms of the agreement, which is expected to be finalized within six months, Homestore.com will acquire Move.com in an all-stock deal totaling approximately 26.3 million shares of the company's common stock. The deal is worth $761 million based on Thursday's closing price of $28.953 per share.
Homestore.com said it expects the acquisition to be accreted to the company's fiscal 2001 earnings. When the deal is closed, Cendant Corporation will be entitled to name one director to Homestore.com's board.
The acquisition is subject to the approval of Homestore.com's shareholders and regulatory review. According to the companies, the transaction is already under review by the antitrust division of the U.S. Department of Justice.
The transaction does not include National Home Connections or Metro Rent, which will be retained by Cendant. However, Homestore.com will acquire Cendant's Welcome Wagon, the direct marketing program that provides new homeowners with information about area retailers.
Restrictions Imposed
The terms of the deal restrict Cendant's ability to sell its Homestore.com shares. Cendant has also agreed to a ten-year standstill which, under most conditions, prohibits the company from acquiring additional Homestore.com common shares.
In all corporate matters, Cendant will vote its shares in proportion to the voting decisions of all other shareholders.
Cendant will also become an equity investor in Homestore.com's technology project to develop an online real estate transaction platform. Other project partners include the National Association of Realtors (NAR), Fannie Mae, GMAC Real Estate, GMAC Mortgage and VeriSign (Nasdaq: VRSN).
NAR Deal Not Affected
The transaction will give Homestore.com the exclusive rights for 40 years to the aggregated online residential real estate listings of Cendant's three national real estate franchises -- Century 21, Coldwell Banker and ERA. Together the franchises are involved in approximately 25 percent of all U.S. residential real estate transactions.
The three franchises have also agreed to develop cross-marketing campaigns with Homestore.com and feature the Realtor.com URL in at least 50 percent of their offline advertising campaigns.
According to NAR President Dennis Cronk, the deal will not alter the NAR's operating agreement with Homestore.com. The NAR is a Homestore.com investor, and Homestore.com-operated Realtor.com is the official Web site of the NAR.
Cronk said, "Realtor.com will continue to be operated for the benefit of all Realtors without any bias or other advantage or preference over other real estate firms."
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