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WASHINGTON, DC-Locally based CoStar Group Inc. and San Francisco-based LoopNet Inc., both publicly held, have signed an agreement for CoStar to acquire LoopNet for cash and CoStar stock in a deal valued at $860 million. The transaction, which is subject to customary closing conditions including shareholder approval, is expected to close by the end of this year.

The two companies, which were once involved in lawsuits against each other but settled those suits in 2009, said in an announcement regarding the merger that the transaction will double the size of CoStar's paid subscriber base to at least 160,00, “which represents approximately 15% of the estimated one million participants in the commercial real estate market.” They said CoStar's market studies have indicated that customers view the services of the two companies as serving two very different but complementary needs and that the overlap between CoStar and LoopNet subscribers is estimated to be relatively low. “As a result, CoStar expects significant cross-selling opportunities between the two customer bases,” the announcement said.

Boyle