CoStar Group has cleared an important legal hurdle in its plan to acquire competing rental-listings company RentPath. A federal bankruptcy judge approved CoStar’s reorganization plan, allowing it to proceed with the $588 million merger.
The planned merger must be approved by the Federal Trade Commision, which will decide whether it complies with antitrust laws, according to the Wall Street Journal. The FTC decision is expected in August.
A CoStar spokesperson confirmed the news but didn’t answer follow-up questions from the AIM Group about the case.
CoStar, which owns Apartments.com, the dominant rental specialist site in the U.S. in terms of traffic, proposed acquiring RentPath in February after the company filed for bankruptcy. RentPath is owned by private-equity firms TPG Capital and Providence Equity Partners LLC. It has been a major force in U.S. apartment rental listings with its sites Rent.com, ApartmentGuide.com, Rentals.com and Lovely.com.
Together, the company’s sites had more than 21 million monthly visits and nearly 9 million monthly unique visitors in 2019. However, RentPath was ultimately priced out of business because it could no longer afford Google keywords that are essential in driving web traffic, according to CoStar CEO Andrew Florance.
“We believe that the synergies, efficiencies and scale we could gain from the combination will make it possible to continue to sustain more advertising and marketing to build more brand awareness and in turn generate an increased flow of quality leads for all of our customers,” Florance said.