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CoStar to buy LoopNet for $860M

CoStar Group, based in Maryland, today, signed an agreement to purchase it's rival and competitor the San Francisco based LoopNet, CoStar reported today.

J.P. Morgan is loaning CoStar Group the capital it will need to complete the deal.

CoStar reports revenues of $59.6 million in the first quarter of 2011 and LoopNet reported 20.7 million in the same time frame. This will increase overall revenue to over $300 Million annually for CoStar Group.

LoopNet shareholders will receive a reported $16.50 per share and .037 shares of CoStar stock for each LoopNet share owned.

This consolidation would double CoStar's paid subscriber base to a reported 160,000. This would give CoStar a 15% share of the over 1 million United States Commercial Real Estate participants in this market.

CoStar is calling this a Joining of Forces to create the premier online resource for researching, analyzing and marketing of commercial real estate properties. LoopNet has been working on a system that will allow the user to search any property in the United States for relevant data on the property and I do not know if CoStar was working on the same program, but I am sure they will utilize such a service and become the place where commercial investors and professionals go to get information on properties.

"We are combining two very innovative companies that have transformed the commercial real estate industry," Andrew C. Florance, CoStar Group's Founder and CEO, said in a conference call announcing the agreement. "CoStar revolutionized how the industry researches commercial real estate and LoopNet revolutionized the way the industry markets commercial real estate. We believe that the combination of our two outstanding and complementary companies will lead to even more innovation and greater efficiencies by creating the premier Internet solution for the commercial real estate industry. We expect the benefits to our customers and ultimately our shareholders to be very significant."

"CoStar and LoopNet have been at the cutting edge of innovation in their respective businesses, and we believe the two companies will be even stronger together," said Richard Boyle, Chairman and CEO of LoopNet. "This transaction combines the capabilities and best practices of two successful and very complementary companies. We are excited about the possibilities that can be created together."

The full announcement can be viewed here.

Florance noted how the two firms developed completely different business models to address the challenges of aggregating content across the massive, complex and constantly changing commercial real estate market, an asset class in which an estimated nearly $3 trillion dollars in transactions occur annually.

"Each model excels at tracking a differing major segment of the industry, but neither comes close to covering the entire industry," Florance said. "Once the combination of LoopNet and CoStar is complete, we believe that we will deliver a higher quality marketing solution to LoopNet’s customers and a higher quality information solution to CoStar’s customers."

For more information from CoStar go to http://www.costar.com/News/Article/CoStar-and-LoopNet-To-Join-Force...