April 27, 2011 / 10:04 PM / 7 years ago

UPDATE 3-CoStar Group to buy LoopNet for $860 mln

* CoStar to pay in cash and stock

* Deal at 31 pct premium

* JP Morgan, Evercore advisers to the deal

* LoopNet shares up 26 pct (Adds details)

By Aditi Sharma

April 27 (Reuters) - CoStar Group Inc , an information service provider to REITs, agreed to buy LoopNet Inc for about $860 million in cash and stock, to double its paid subscriber base.

The transaction will double the size of CoStar’s paid subscriber base to at least 160,000, or about 15 percent of the estimated 1 million participants in the commercial real estate market, the company said.

LoopNet operates LoopNet.com, a commercial real estate listing service with over 4 million members in the United States and Canada.

LoopNet.com is the industry’s largest online market place with 4.8 million registered members and more than 6 million unique visitors quarterly, according to Google Analytics, CoStar said in a statement.

CoStar operates the largest real estate information database with over 77 billion square feet of office, retail, and industrial inventory, 1.5 million listings, and 10.6 million images.

The offer is at a premium of 31 percent to LoopNet’s Tuesday close of $14.31 on Nasdaq.

LoopNet shareholders will get $16.50 in cash and 0.03702 shares of CoStar common stock for each share held.

Following the transaction, LoopNet share holders will own about 8.5 percent of CoStar shares outstanding on a fully diluted basis.

The enterprise value of the transaction, which is expected to close by the end of the year, is $762 million.

CoStar expects the deal to add to adjusted net income in 2012.

The combined companies will have annualized revenue of about $321 million.

CoStar said it will fund the deal with a $415 million term loan from J.P. Morgan and a $50 million revolving credit facility.

JP Morgan acted as CoStar’s financial adviser and Evercore Partners acted as LoopNet’s advisers.

Separately, both the companies also reported their first-quarter results. [ID:nASA0200R] [ID:nASA02007]

Shares of San Francisco, California-based Loopnet were trading up 26 percent at $18.15 after the bell, while those of CoStar closed at $61.38 on Wednesday on Nasdaq. (Reporting by Aditi Sharma and Supantha Mukherjee in Bangalore;Editing by Vyas Mohan and Unnikrishnan Nair)

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