The Federal Trade Commission has put an apparent halt to CoStar’s attempted acquisition of rival RentPath, it was announced late Tuesday. The FTC filed a lawsuit late last month alleging the acquisition would increase concentration and eliminate competition in the rental listing space.
Dhiren Fonseca | Photo credit: Alaska Air
RentPath, which had filed for chapter 11 bankruptcy prior to the attempted acquisition, will instead restructure its operations and renew its focus on “delivering value” through its search platforms, Rent.com and ApartmentGuide.com, the company said.
“RentPath provides tremendous value to our customers across the multifamily industry,” RentPath CEO Dhiren Fonseca said in a statement. “In fact, our value proposition has never been better than it is today.”
RentPath, like many other search portals, has enjoyed record traffic during the pandemic. Traffic growth in the second half of 2020 was up 40 percent year over year for the entire network.
“We have a range of high growth products that complement our core apartment search websites, and we are excited to emerge from restructuring and continue to build on this foundation,” Fonseca added.
The acquisition had been nearly a year in the making before the FTC stepped in with an administrative complaint. CoStar — which operates rivals sites Apartments.com, ApartmentFinder.com and ForRent.com — announced in February it was purchasing RentPath for $587.5 million. The acquisition came on the heels of RentPath filing for bankruptcy, after failing to restructure $650 million in debt.
The FTC alleged in a statement that the acquisition would increase concentration in the already highly concentrated market for internet listing services advertising for large apartment complexes in 49 U.S. metro areas.
“In business, like in hockey, you do not win by skating to where the puck was,” Andrew Florance, CoStar Group’s founder and CEO, told Inman, in a statement, when asked about RentPath pulling out of the deal. “You win by skating to where the puck is going to be.”
CoStar’s other big acquisition meanwhile has already received the green light from the FTC. CoStar announced in November it would acquire the residential real estate listing portal and technology company Homesnap for $250 million.
On December 17, the FTC cleared the acquisition, CoStar’s first big move into the residential real estate for-sale listing space. The company also purchased Ten-X, the company behind real estate auction platform auction.com and its accompanying commercial auction platform ten-x.com, earlier this year.
“Adding Homesnap to CoStar Group’s network provides significant complementary value to our existing arsenal of broker and agent-centric tools, directly benefiting the entire industry,” Florance said in a statement. “We share a common goal of strengthening connections that drive the real estate industry forward and are excited that regulatory review was completed so rapidly, allowing us to close this transaction quickly.”
