CoStar Group has signed a definitive agreement to acquire LoopNet for approximately $860 million. The transaction between the two companies is expected to close by the end of 2011. As part of the agreement, LoopNet shareholders will receive $16.50 in cash and approximately 0.04 shares of CoStar Group common stock for each share of LoopNet common stock. This equates to a total equity value of approximately $860 million and an enterprise value of $762 million. Upon closing, LoopNet shareholders will own approximately 8.5 percent of CoStar shares outstanding on a fully diluted basis. In addition, CoStar has received a commitment from J.P. Morgan for a $415 million loan and a $50 million revolving credit facility, which will be used to fund the acquisition and for general operating purposes.
"CoStar revolutionized how the industry researches commercial real estate and LoopNet revolutionized the way the industry markets commercial real estate," said Andrew Florence, president and CEO of CoStar, in a statement. "We expect the combination of our companies to give the $11 trillion commercial real estate market the full benefit of the Internet." With the merger, CoStar's subscriber base stands to grow from 88,000 subscribers to at least 160,000 subscribers, representing approximately 15 percent of the commercial real estate market's participants. LoopNet.com currently has 4.8 million registered users and more than 6 million unique visits quarterly.
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