424B3 1 d778624d424b3.htm 424B3 424B3
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Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-198695

LOGO   LOGO
Zillow, Inc.   Trulia, Inc.

TO THE SHAREHOLDERS OF ZILLOW, INC. AND STOCKHOLDERS OF TRULIA, INC.

MERGER PROPOSAL — YOUR VOTE IS VERY IMPORTANT

November 17, 2014

Dear Shareholders:

Zillow, Inc. (“Zillow”) and Trulia, Inc. (“Trulia”) have entered into a merger agreement, pursuant to which Zillow will acquire Trulia under a newly formed holding company, currently named Zebra Holdco, Inc. (“Holdco”). Following successive merger transactions (the “mergers”), Zillow and Trulia will become wholly owned subsidiaries of Holdco. The combined company will maintain both the Zillow and Trulia consumer brands, offering buyers, sellers, homeowners and renters access to vital information about homes and real estate for free, and providing advertising and software solutions that help real estate professionals grow their businesses.

Upon completion of the mergers, holders of Zillow Class A common stock will receive one share of Holdco Class A common stock for each share of Zillow Class A common stock, holders of Zillow Class B common stock will receive one share of Holdco Class B common stock for each share of Zillow Class B common stock, and holders of Trulia common stock will receive 0.444 of a share of Holdco Class A common stock for each share of Trulia common stock. The Holdco Class A common stock will have one vote per share, and the Holdco Class B common stock will have ten votes per share, similar to the current capital structure of Zillow. We anticipate that Zillow shareholders will hold approximately 67% of Holdco common stock and Trulia stockholders will hold approximately 33% of Holdco common stock, on a fully-diluted basis immediately after completion of the mergers, based on outstanding shares of common stock, stock options, restricted stock units, and stock appreciation rights of Zillow and Trulia, as applicable, and shares issuable upon conversion of Trulia’s outstanding convertible notes, as of June 30, 2014. The actual relative ownership percentages of the Zillow shareholders and the Trulia stockholders in Holdco immediately after completion of the mergers will vary based on the number of outstanding shares of common stock, and securities exercisable or convertible into common stock, of Zillow and Trulia immediately prior to completion of the mergers. Holdco intends to apply to list its Class A common stock on the NASDAQ Global Stock Market under the symbol “Z,” subject to official notice of issuance. Based on the outstanding shares of Zillow and Trulia common stock as of October 9, 2014, and assuming no Zillow or Trulia stock options, restricted stock units, stock appreciation rights, or convertible notes are exercised, settled, or converted, as applicable, between October 9, 2014 and the effective times of the mergers, Holdco would be required to issue 51,188,746 shares of Holdco Class A common stock and 6,217,447 shares of Holdco Class B common stock upon completion of the mergers.

Completion of the mergers requires, among other things, the separate approvals of both Zillow shareholders and Trulia stockholders. To obtain these required approvals, Zillow will hold a special meeting of Zillow shareholders on December 18, 2014, and Trulia will hold a special meeting of Trulia stockholders on December 18, 2014. As a result of their beneficial ownership of more than a majority of the outstanding voting power of the shares of Zillow Class A common stock and Zillow Class B common stock, Zillow’s founders, Richard Barton and Lloyd Frink, will have the power to approve each of the Zillow proposals without the affirmative vote of any other Zillow shareholder. Messrs. Barton and Frink have entered into a voting agreement with each other pursuant to which they agreed to, among other things, vote their shares of Zillow common stock in favor of each of the Zillow proposals.

 

THE ZILLOW AND TRULIA BOARDS OF DIRECTORS RECOMMEND THAT YOU VOTE “FOR” THE PROPOSALS TO APPROVE OR ADOPT THE MERGER AGREEMENT, AS APPLICABLE.

Information about the special meetings, the mergers, and the other business to be considered by Zillow shareholders and Trulia stockholders is contained in the accompanying joint proxy statement/prospectus and the documents incorporated by reference, which we urge you to read carefully. In particular, see “Risk Factors” beginning on page 42 of the accompanying joint proxy statement/prospectus.

Your vote is very important. Whether or not you plan to attend the special meeting of Zillow shareholders or the special meeting of Trulia stockholders, as applicable, please submit a proxy to vote your shares as soon as possible to make sure your shares are represented at the applicable special meeting. Your failure to vote will have the same effect as voting “AGAINST” the proposal to approve or adopt the merger agreement, as applicable.

 

LOGO

Spencer Rascoff

Chief Executive Officer

Zillow, Inc.

 

LOGO

Peter Flint

Chief Executive Officer

Trulia, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the securities to be issued in connection with the mergers or determined if the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated November 17, 2014, and is first being mailed or otherwise delivered to Zillow shareholders and Trulia stockholders on or about November 19, 2014.


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ADDITIONAL INFORMATION

The accompanying joint proxy statement/prospectus incorporates by reference important business and financial information about Zillow and Trulia from documents that are not included in or delivered with the joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference in the joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the addresses and telephone numbers listed below. To obtain timely delivery, you must request the information no later than five business days before the special meetings.

 

Zillow, Inc.

1301 Second Avenue, Floor 31

Seattle, Washington 98101

Attention: Investor Relations

(866) 504-0030

http://investors.zillow.com

 

Trulia, Inc.

535 Mission Street, Suite 700

San Francisco, California 94105

Attention: Investor Relations

(415) 648-4358

http://ir.trulia.com

In addition, if you have questions about the mergers or the special meetings, or if you need to obtain copies of the accompanying joint proxy statement/prospectus, proxy cards, voter instruction forms or documents incorporated by reference in the joint proxy statement/prospectus, you may contact the appropriate contact listed below. You will not be charged for any of the documents you request.

 

If you are a Zillow shareholder:

Georgeson Inc.

480 Washington Boulevard, 26th Floor

Jersey City, New Jersey 07310

Call toll-free: (800) 868-1391

Email: Zillow@Georgeson.com

 

If you are a Trulia stockholder:

MacKenzie Partners, Inc.

105 Madison Avenue

New York, New York 10016

Call toll-free: (800) 322-2885

Call collect: (212) 929-5500

Email: proxy@mackenziepartners.com

If you would like to request documents, you must do so by December 11, 2014, in order to receive them before the special meetings.

For a more detailed description of the information incorporated by reference in the accompanying joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page 223 of the accompanying joint proxy statement/prospectus.


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LOGO

ZILLOW, INC.

1301 Second Avenue, Floor 31

Seattle, Washington 98101

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF ZILLOW, INC.

December 18, 2014

To the Shareholders of Zillow, Inc.:

A special meeting of the shareholders of Zillow, Inc. (“Zillow”) will be held on December 18, 2014, at 8:00 a.m. Pacific time at the offices of Perkins Coie LLP, 1201 Third Avenue, 48th Floor, Seattle, Washington 98101 (the “Zillow special meeting”) to consider and vote upon the following matters:

 

  1. to approve the Agreement and Plan of Merger, dated as of July 28, 2014 (the “merger agreement”), by and among Zillow, Zebra Holdco, Inc. (“Holdco”), and Trulia, Inc. (“Trulia”) — THE MERGERS WILL ONLY OCCUR IF PROPOSAL NO. 2 IS ALSO APPROVED;

 

  2. to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation;

 

  3. to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

  4. to transact any other business that may properly come before the Zillow special meeting or any adjournment or postponement thereof.

Zillow shareholders are or may be entitled to assert dissenters’ rights with respect to the Zillow merger under Chapter 23B.13 of the Revised Code of Washington (Washington Business Corporation Act). See “The Mergers — Appraisal/Dissenters’ Rights.”

 

THE ZILLOW BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ZILLOW SHAREHOLDERS VOTE “FOR” EACH PROPOSAL.

The above matters are more fully described in this joint proxy statement/prospectus, which also includes, as Annex A, a copy of the merger agreement. The record date for the determination of the shareholders entitled to notice of, and to vote at, the Zillow special meeting, or any adjournment of the Zillow special meeting, was the close of business on November 5, 2014. At least ten days prior to the Zillow special meeting, a complete list of shareholders of record as of November 5, 2014 will be available for inspection by any shareholder for any purpose germane to the Zillow special meeting, between the hours of 9:00 a.m. and 4:30 p.m. Pacific time, at Zillow’s principal executive offices located at 1301 Second Avenue, Floor 31, Seattle, Washington 98101. If you would like to view the shareholder list, please contact Zillow’s Investor Relations Department at (866) 504-0030. This list will also be available at the Zillow special meeting.

As a shareholder of record, you are cordially invited to attend the Zillow special meeting in person. Regardless of whether you expect to be present at the Zillow special meeting, please either complete, sign, and date the enclosed proxy card and mail it promptly in the enclosed envelope or vote electronically via the Internet or telephone as described in greater detail in the joint proxy statement/prospectus and on the enclosed proxy card. Returning the enclosed proxy card, or voting electronically or telephonically, will not affect your right to vote in person if you attend the Zillow special meeting. You should NOT send certificates representing Zillow common stock with the proxy card.

By Order of the Board of Directors,

 

LOGO

Kathleen Philips

Chief Operating Officer and Secretary

November 17, 2014


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YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY, WHETHER OR NOT YOU EXPECT TO ATTEND THE ZILLOW SPECIAL MEETING. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE MERGERS OR THE ZILLOW SPECIAL MEETING, PLEASE CONTACT ZILLOW, INC., ATTENTION: INVESTOR RELATIONS, 1301 SECOND AVENUE, FLOOR 31, SEATTLE, WASHINGTON 98101, (866) 504-0030. IF YOU HAVE QUESTIONS ABOUT VOTING YOUR SHARES, PLEASE FOLLOW THE CONTACT INSTRUCTIONS ON YOUR PROXY CARD.


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LOGO

TRULIA, INC.

535 Mission Street, Suite 700

San Francisco, California 94105

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF TRULIA, INC.

December 18, 2014

To the Stockholders of Trulia, Inc.:

A special meeting of the stockholders of Trulia, Inc. (“Trulia”) will be held on December 18, 2014, at 8:00 a.m. Pacific time at 535 Mission Street, Suite 700, San Francisco, California 94105 (the “Trulia special meeting”) to consider and vote upon the following matters:

 

  1. to adopt the Agreement and Plan of Merger, dated as of July 28, 2014 (the “merger agreement”), by and among Zillow, Inc. (“Zillow”), Zebra Holdco, Inc. (“Holdco”), and Trulia, pursuant to which Trulia will become a wholly-owned subsidiary of Holdco — THE MERGERS WILL ONLY OCCUR IF PROPOSAL NO. 2 IS ALSO APPROVED;

 

  2. to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation;

 

  3. to approve the adjournment of the Trulia special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

  4. to transact any other business that may properly come before the Trulia special meeting or any adjournment or postponement thereof.

 

THE TRULIA BOARD OF DIRECTORS RECOMMENDS THAT TRULIA STOCKHOLDERS VOTE “FOR” EACH PROPOSAL.

The above matters are more fully described in this joint proxy statement/prospectus, which also includes, as Annex A, a copy of the merger agreement. The record date for the determination of the stockholders entitled to notice of, and to vote at, the Trulia special meeting, or any adjournment of the Trulia special meeting, was the close of business on October 27, 2014. At least ten days prior to the Trulia special meeting, a complete list of stockholders of record as of October 27, 2014 will be available for inspection at Trulia’s executive offices located at 535 Mission Street, Suite 700, San Francisco, California 94105. If you would like to view the stockholder list, please contact Trulia’s Investor Relations Department at (415) 648-4358. This list will also be available at the Trulia special meeting.

As a stockholder of record, you are cordially invited to attend the Trulia special meeting in person. Regardless of whether you expect to be present at the Trulia special meeting, please either complete, sign, and date the enclosed proxy card and mail it promptly in the enclosed envelope or vote electronically via the Internet or telephone as described in greater detail in the joint proxy statement/prospectus and on the enclosed proxy card. Returning the enclosed proxy card, or voting electronically or telephonically, will not affect your right to vote in person if you attend the Trulia special meeting. You should NOT send certificates representing Trulia common stock with the proxy card.

By Order of the Board of Directors,

 

LOGO

Peter Flint

Chief Executive Officer

November 17, 2014


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YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY, WHETHER OR NOT YOU EXPECT TO ATTEND THE TRULIA SPECIAL MEETING. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE MERGERS OR THE TRULIA SPECIAL MEETING, PLEASE CONTACT TRULIA, INC., ATTENTION: INVESTOR RELATIONS, 535 MISSION STREET, SUITE 700, SAN FRANCISCO, CALIFORNIA 94105, (415) 648-4358. IF YOU HAVE QUESTIONS ABOUT VOTING YOUR SHARES, PLEASE FOLLOW THE CONTACT INSTRUCTIONS ON YOUR PROXY CARD.


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JOINT PROXY STATEMENT/PROSPECTUS

TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGERS AND THE SPECIAL MEETINGS

     1   

SUMMARY

     16   

Information About the Companies

     16   

The Mergers and the Merger Agreement

     16   

Merger Consideration to Be Received by Zillow Shareholders

     17   

Merger Consideration to Be Received by Trulia Stockholders

     17   

Total Holdco Shares to Be Issued

     17   

Comparative Per Share Market Price and Dividend Information

     18   

Zillow Special Meeting

     18   

Trulia Special Meeting

     20   

Recommendation of the Zillow Board

     22   

Recommendation of the Trulia Board

     22   

Reasons for Zillow and Trulia to Enter into the Merger Agreement

     22   

Accounting Treatment

     23   

Opinion of Financial Advisor to Zillow

     23   

Opinion of Financial Advisor to Trulia

     23   

Interests of Officers and Directors in the Mergers

     24   

Regulatory Approvals

     25   

Voting Agreements

     25   

No Solicitation

     26   

Restrictions on Recommendation Withdrawal

     27   

Conditions to Completion of the Mergers

     27   

Closing

     28   

Termination of the Merger Agreement

     28   

Termination Fees; Expenses

     28   

Material U.S. Federal Income Tax Consequences

     28   

Appraisal/Dissenters’ Rights

     29   

Listing of Holdco Class A Common Stock

     29   

Comparison of Shareholder Rights

     29   

Authorization of Nonvoting Class C capital Stock in Holdco’s Amended and Restated Articles of Incorporation

     29   

Litigation Relating to the Mergers

     30   

ZILLOW SELECTED HISTORICAL FINANCIAL DATA AND OTHER DATA

     32   

TRULIA SELECTED HISTORICAL FINANCIAL DATA AND OTHER DATA

     35   

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     38   

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE INFORMATION

     39   

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     40   

RISK FACTORS

     42   

Risk Factors Relating to the Mergers

     42   

Risk Factors Relating to Holdco After Completion of the Mergers

     47   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS ZILLOW, INC. AND TRULIA, INC.

     52   


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     Page  

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS ZILLOW, INC. AND STREETEASY, INC.

     68   

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS TRULIA, INC. AND MARKET LEADER, INC.

     73   

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

     79   

INFORMATION ABOUT THE COMPANIES

     80   

Zillow, Inc.

     80   

Trulia, Inc.

     80   

Zebra Holdco, Inc.

     80   

THE ZILLOW SPECIAL MEETING

     80   

Date, Time and Place

     81   

Purpose

     81   

Recommendation of the Zillow Board

     81   

Record Date; Shares Entitled to Vote

     81   

Quorum; Abstentions and Broker Non-Votes

     82   

Vote Required

     82   

Voting by Zillow’s Directors and Executive Officers

     83   

How to Vote

     83   

Voting of Proxies

     84   

Revoking Your Proxy

     84   

Attending the Zillow Special Meeting

     84   

Adjournments and Postponements

     85   

Solicitation of Proxies

     85   

Shareholder List

     85   

Other Business

     86   

Assistance

     86   

THE TRULIA SPECIAL MEETING

     87   

Date, Time, and Place

     87   

Purpose

     87   

Recommendation of the Trulia Board

     87   

Record Date; Shares Entitled to Vote

     88   

Quorum; Abstentions and Broker Non-Votes

     88   

Vote Required

     88   

Voting by Trulia’s Directors and Executive Officers

     89   

How to Vote

     89   

Voting of Proxies

     90   

Revoking Your Proxy

     90   

Attending the Trulia Special Meeting

     90   

Adjournments and Postponements

     91   

Householding of Stockholder Materials

     91   

Solicitation of Proxies

     91   

Stockholder List

     92   

Other Business

     92   

Assistance

     92   

THE MERGERS

     93   

General

     93   


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     Page  

Background of the Mergers

     93   

Recommendation of the Zillow Board; Zillow’s Reasons for the Merger

     102   

Certain Prospective Financial Information Reviewed by the Zillow Board and Zillow’s Financial Advisor

     106   

Opinion of Financial Advisor to Zillow

     109   

Recommendation of the Trulia Board; Trulia’s Reasons for the Merger

     117   

Certain Prospective Financial Information Reviewed by the Trulia Board and Trulia’s Financial Advisor

     120   

Opinion of Financial Advisor to Trulia

     123   

Other Trulia Advisor

     133   

Interests of Officers and Directors in the Mergers

     133   

Holdco’s Board and Management After the Mergers

     140   

Exchange of Certificates; No Fractional Shares

     142   

Regulatory Approvals

     144   

Material U.S. Federal Income Tax Consequences

     145   

Accounting Treatment of the Mergers

     148   

Appraisal/Dissenters’ Rights

     148   

Listing of Holdco Class A Common Stock

     152   

Delisting and Deregistration of Zillow Class A Common Stock

     152   

Delisting and Deregistration of Trulia Common Stock

     152   

Litigation Relating to the Mergers

     152   

THE MERGER AGREEMENT

     154   

Structure of the Mergers

     154   

Closing

     155   

Effective Times

     155   

Merger Consideration to be Received by Zillow Shareholders

     155   

Merger Consideration to be Received by Trulia Stockholders

     155   

Treatment of Zillow Stock Options, Restricted Stock Units, and Other Stock Awards

     155   

Treatment of Trulia Stock Options, Restricted Stock Units, and Other Stock Awards

     156   

Exchange of Certificates; No Fractional Shares

     157   

Representations and Warranties

     160   

Covenants of the Parties

     161   

Conditions to the Mergers

     169   

Termination

     171   

Effect of Termination

     172   

Termination Fees; Expenses

     172   

Amendment and Waiver

     173   

Specific Performance

     174   

Governing Law

     174   

VOTING AGREEMENTS

     175   

Trulia Voting Agreements

     175   

Zillow Voting Agreement

     177   

PROPOSAL NO. 2: APPROVAL OF AUTHORIZATION OF NONVOTING CLASS C CAPITAL STOCK IN HOLDCO’S AMENDED AND RESTATED ARTICLES OF INCORPORATION BY ZILLOW SHAREHOLDERS AND TRULIA STOCKHOLDERS

     179   

Overview

     179   

Reasons For Recommendation to Approve Authorization of the Holdco Class C Capital Stock

     179   


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     Page  

Other Considerations

     180   

Required Vote

     182   

Interests of Certain Persons

     182   

CERTAIN BENEFICIAL OWNERS OF ZILLOW COMMON STOCK

     184   

CERTAIN BENEFICIAL OWNERS OF TRULIA COMMON STOCK

     187   

DESCRIPTION OF HOLDCO’S CAPITAL STOCK

     190   

COMPARISON OF SHAREHOLDER RIGHTS

     197   

EXPERTS

     220   

LEGAL MATTERS

     220   

FUTURE SHAREHOLDER PROPOSALS

     221   

WHERE YOU CAN FIND MORE INFORMATION

     223   

ANNEX A — Agreement and Plan of Merger

     A-1   

ANNEX B — Form of Trulia Voting Agreement

     B-1   

ANNEX C — Zillow Voting Agreement

     C-1   

ANNEX D — Opinion of Goldman, Sachs & Co.

     D-1   

ANNEX E — Opinion of J.P. Morgan Securities LLC

     E-1   

ANNEX F — Amended and Restated Articles of Incorporation of Zebra Holdco, Inc.

     F-1   

ANNEX G — Amended and Restated Bylaws of Zebra Holdco, Inc.

     G-1   

ANNEX H — Chapter 23B.13 of the Revised Code of Washington (Washington Business Corporation Act)

     H-1   


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QUESTIONS AND ANSWERS ABOUT THE MERGERS AND THE SPECIAL MEETINGS

The following questions and answers are intended to briefly address some commonly asked questions regarding the mergers and the special meetings. These questions and answers may not address all questions that may be important to you as a shareholder of Zillow or a stockholder of Trulia. To better understand these matters, and for a description of the legal terms governing the mergers, you should carefully read this entire joint proxy statement/prospectus, including the annexes, as well as the documents that have been incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 223. All references in this joint proxy statement/prospectus to “Zillow” refer to Zillow, Inc., a Washington corporation; all references to “Trulia” refer to Trulia, Inc., a Delaware corporation; all references to “Holdco” refer to Zebra Holdco, Inc., a Washington corporation; all references to “Zillow Merger Sub” refer to a to-be-formed wholly owned subsidiary of Holdco, which will be used to effect the Zillow merger; all references to “Trulia Merger Sub” refer to a to-be-formed wholly owned subsidiary of Holdco, which will be used to effect the Trulia merger; and all references to the “Merger Subs” refer to Zillow Merger Sub and Trulia Merger Sub, collectively. Unless otherwise indicated or as the context requires, all references in this joint proxy statement/prospectus to “we,” “us,” or “our” refer to Zillow and Trulia, and all references to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of July 28, 2014, as it may be amended from time to time, by and among Zillow, Holdco, and Trulia, a copy of which is attached as Annex A to this joint proxy statement/prospectus.

About the Mergers

 

Q: What is the proposed transaction on which I am being asked to vote?

 

A: Zillow, Holdco, and Trulia have entered into the merger agreement providing for the acquisition of Trulia by Zillow. Prior to the closing, Holdco will form two direct subsidiaries, Zillow Merger Sub and Trulia Merger Sub. Pursuant to the merger agreement, Zillow Merger Sub will merge with and into Zillow (the “Zillow merger”), the separate existence of Zillow Merger Sub will cease, and Zillow will be the surviving corporation (the “Zillow surviving corporation”), and Trulia Merger Sub will merge with and into Trulia (the “Trulia merger”), the separate existence of Trulia Merger Sub will cease, and Trulia will be the surviving corporation (the “Trulia surviving corporation”). We refer to the Zillow merger and the Trulia merger together as the “mergers.” As a result of the mergers, the Zillow surviving corporation and the Trulia surviving corporation will each become a wholly owned subsidiary of Holdco. As a result of the transactions contemplated by the merger agreement, former holders of Zillow Class A common stock and former Trulia stockholders will own Holdco Class A common stock, which will be listed for trading on the NASDAQ Global Stock Market (“NASDAQ”). Former holders of Zillow Class B common stock will own Holdco Class B common stock. The Holdco Class B common stock will not be listed or quoted for trading in any public trading market.

 

Q: Why am I receiving this joint proxy statement/prospectus?

 

A: Zillow is holding a special meeting of shareholders (the “Zillow special meeting”) in order to obtain the shareholder approval necessary to approve the merger agreement (the “Zillow shareholder approval”). Zillow shareholders will also be asked to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, and to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

Trulia is holding a special meeting of stockholders (the “Trulia special meeting”) in order to obtain the stockholder vote necessary to adopt the merger agreement (the “Trulia stockholder approval”). Trulia stockholders will also be asked to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, and to approve the adjournment of the Trulia special meeting

 

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if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

We will be unable to complete the mergers unless (1) both the Zillow shareholder approval and the Trulia stockholder approval are obtained at the respective special meetings, and (2) both the Zillow shareholders and the Trulia stockholders approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, in addition to other conditions and required approvals.

We have included in this joint proxy statement/prospectus important information about the merger agreement (a copy of which is attached as Annex A), the mergers and the other transactions contemplated by the merger agreement, and the Zillow and Trulia special meetings. You should read this information carefully and in its entirety. The enclosed voting materials allow you to vote your shares without attending the applicable special meeting. YOUR VOTE IS VERY IMPORTANT AND WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS SOON AS POSSIBLE.

 

Q: What will Zillow shareholders receive in the Zillow merger?

 

A: At the effective time of the Zillow merger, each share of Class A common stock of Zillow, par value $0.0001 per share (the “Zillow Class A common stock”), other than the shares of Zillow common stock held by Zillow, Holdco, Trulia, or any direct or indirect wholly owned subsidiary of Zillow or Trulia (the “Zillow excluded shares”) and Zillow dissenting shares, will be converted into the right to receive one share (the “Zillow Class A exchange ratio”) of fully paid and nonassessable Holdco Class A common stock, par value $0.0001 per share (the “Zillow Class A merger consideration”), and each share of Class B common stock of Zillow, par value $0.0001 per share (the “Zillow Class B common stock” and, together with the Zillow Class A common stock, the “Zillow common stock”) will be converted into the right to receive one share (the “Zillow Class B exchange ratio”) of fully paid and nonassessable Holdco Class B common stock, par value $0.0001 per share (the “Zillow Class B merger consideration” and, together with the Zillow Class A merger consideration, the “Zillow merger consideration”). The Zillow excluded shares will be canceled and will not receive the Zillow merger consideration.

Zillow shareholders will not receive any fractional shares of Holdco common stock in the Zillow merger. Instead of receiving any fractional shares, each holder of Zillow common stock will be paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ (as reported in The Wall Street Journal or, if not reported therein, in another authoritative source mutually selected by Zillow and Trulia) on the last complete trading day prior to the effective time of the Zillow merger.

 

Q: What will Trulia stockholders receive in the Trulia merger?

 

A: At the effective time of the Trulia merger, each share of common stock of Trulia, par value $0.00001 per share (the “Trulia common stock”), other than the shares of Trulia common stock held by Trulia, Holdco, Zillow, or any direct or indirect wholly owned subsidiary of Zillow or Trulia (the “Trulia excluded shares”) will be converted into the right to receive 0.444 of a share (the “Trulia exchange ratio”) of fully paid and nonassessable Holdco Class A common stock, par value $0.0001 per share (the “Trulia merger consideration”). The Trulia excluded shares will be canceled and will not receive the Trulia merger consideration.

Trulia stockholders will not receive any fractional shares of Holdco common stock in the Trulia merger. Instead of receiving any fractional shares, each holder of Trulia common stock will be paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ (as reported in The Wall Street Journal or, if not reported therein, in another authoritative source mutually selected by Zillow and Trulia) on the last complete trading day prior to the effective time of the Trulia merger.

 

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Q: What will the executive officers and directors of Zillow and Trulia receive in the mergers that differs from what the Zillow shareholders and the Trulia stockholders will receive?

 

A: Zillow’s executive officers and non-employee directors will receive what Zillow shareholders will receive in the Zillow merger and none of Zillow’s directors or executive officers is a party to or participates in any Zillow plan, program, or arrangement that provides such director or executive officer with any kind of compensation that is based on or otherwise relates to the completion of the mergers.

Trulia’s executive officers and non-employee directors will receive what Trulia stockholders will receive in the Trulia merger; however, certain of Trulia’s executive officers may receive additional benefits in the Trulia merger, pursuant to pre-existing offer letters and/or equity award agreements with Trulia, and all of Trulia’s non-employee directors will receive additional benefits in the Trulia merger, pursuant to Trulia’s pre-existing non-employee director compensation policy. Certain of Trulia’s executive officers will be entitled to partial and/or full “double trigger” equity acceleration upon a termination by Trulia without cause or a resignation for good reason, each within twelve months of the Trulia merger, and one of Trulia’s executive officers will be entitled to partial equity acceleration upon a termination by Trulia without cause prior to August 31, 2015. With respect to the non-employee directors of Trulia, the vesting of all outstanding stock options and restricted stock units held by such non-employee directors will become accelerated and will fully vest in the Trulia merger. Assuming that the performance conditions applicable to the performance-based restricted stock units held by certain executive officers will be satisfied prior to the closing of the Trulia merger, the estimated value of the equity acceleration that Trulia’s executive officers and non-employee directors may receive in connection with the Trulia merger is as follows: Peter Flint ($13,402,875); Prashant Aggarwal ($11,012,356); Scott Darling ($1,766,716); Daniele Farnedi ($2,274,550); Paul Levine ($11,524,373); Ian Morris ($2,013,734) (which would become vested pursuant to the terms of Mr. Morris’ consulting agreement with Trulia, assuming that he is terminated without cause and regardless of whether the performance conditions are satisfied); Robert Moles ($161,280); Theresia Gouw ($161,280); Sami Inkinen ($161,280); Erik Bardman ($322,622); Gregory Waldorf ($322,622); and Steve Hafner ($318,019). Assuming that the performance conditions applicable to the performance-based restricted stock units held by certain executive officers will not be satisfied prior to the closing of the Trulia merger, the estimated value of the equity acceleration that Trulia’s executive officers and non-employee directors may receive in connection with the Trulia merger is as follows: Peter Flint ($6,038,475); Prashant Aggarwal ($4,261,656); Scott Darling ($1,076,303); Daniele Farnedi ($1,584,138); Paul Levine ($4,773,673); Ian Morris ($2,013,734) (which would become vested pursuant to the terms of Mr. Morris’ consulting agreement with Trulia, assuming that he is terminated without cause and regardless of whether the performance conditions are satisfied); Robert Moles ($161,280); Theresia Gouw ($161,280); Sami Inkinen ($161,280); Erik Bardman ($322,622); Gregory Waldorf ($322,622); and Steve Hafner ($318,019).

In addition, for retention purposes, Scott Darling is eligible to receive a cash payment equal to $225,000, which will cliff vest and become payable on the earlier of (1) the closing of the Trulia merger and (2) January 28, 2016, subject to his continued employment through such date.

Effective as of immediately after the Zillow merger, the Holdco board will include all of the individuals who are directors of Zillow immediately prior to the Zillow merger and two individuals who are then directors of Trulia. The merger agreement provides that the two Trulia board designees will be mutually agreed to by Trulia and Zillow before completion of the mergers (the “Trulia board designees”). As of the date of this joint proxy statement/prospectus, Trulia and Zillow have determined that one of the Trulia board designees will be Peter Flint, and no determination has been made as to the identity of the other Trulia board designee. The Trulia board designees are expected to be finally determined by Trulia and Zillow no later than 30 days prior to the completion of the mergers.

Under the merger agreement, upon completion of the mergers, the executive officers of Zillow at the effective time of the Zillow merger will be the executive officers of the Zillow surviving corporation and the executive officers of Trulia at the effective time of the Trulia merger will be the executive officers of the Trulia surviving corporation. It is currently expected that the executive officers of Zillow and Trulia will continue their employment with the Zillow surviving corporation or Trulia surviving corporation, as

 

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applicable, following the effective time of the Zillow merger or effective time of the Trulia merger, as applicable, on substantially similar terms and conditions as in existence immediately prior to the effective time of the Zillow merger or the Trulia merger, as applicable. See “The Mergers — Interests of Officers and Directors in the Mergers” for more information about these interests, and “The Mergers — Interests of Officers and Directors in the Mergers — Quantification of Equity Acceleration” for the quantification of the benefits that Trulia executive officers and directors may or will receive as a result of any equity acceleration that may be triggered in connection with the Trulia merger.

 

Q: Should I send in my share certificates now for the exchange?

 

A: No. Zillow shareholders and Trulia stockholders should keep any share certificates they hold at this time. After the mergers are completed, Zillow shareholders and Trulia stockholders will each receive from Holdco’s exchange agent a letter of transmittal and instructions on how to obtain the Zillow merger consideration or Trulia merger consideration, as applicable.

 

Q: What equity stake will former Zillow shareholders and former Trulia stockholders hold in Holdco?

 

A: Based on shares of common stock, stock options, restricted stock units, and stock appreciation rights of Zillow and Trulia, as applicable, and shares of Trulia common stock issuable upon conversion of Trulia’s outstanding convertible notes, in each case outstanding as of June 30, 2014, immediately following the closing of the mergers, Zillow shareholders would hold approximately 67% of Holdco common stock and Trulia stockholders would hold approximately 33% of Holdco common stock, on a fully-diluted basis. The actual relative ownership percentages of Zillow shareholders and Trulia stockholders in Holdco immediately after completion of the mergers will vary based on the number of outstanding shares of common stock and securities exercisable or convertible into common stock of Zillow and Trulia immediately prior to completion of the mergers.

 

Q: What equity stake will Zillow’s founders hold in Holdco?

 

A: As of October 9, 2014, the holdings of Zillow’s founders, Richard Barton and Lloyd Frink, represented approximately 39% and 25%, respectively, of the voting power of Zillow’s outstanding capital stock (without giving effect to the Zillow voting agreement, as defined below). Upon closing of the mergers, Mr. Barton’s holdings and Mr. Frink’s holdings would represent approximately 33% and 22%, respectively, of the voting power of Holdco’s capital stock based on the outstanding shares of Zillow and Trulia as of October 9, 2014 and assuming no Zillow or Trulia stock options, restricted stock units, stock appreciation rights, or convertible notes are exercised, settled, or converted, as applicable, between October 9, 2014 and the effective times of the mergers. As a result, as of the closing of the mergers, Zillow’s founders will have the ability to elect all of Holdco’s directors and to determine the outcome of most matters submitted for a vote of Holdco shareholders.

 

Q: How do I calculate the value of the Zillow Class A merger consideration?

 

A: Because Holdco will issue a fixed number of shares of Holdco common stock in exchange for each share of Zillow common stock, the value of the Zillow Class A merger consideration that Zillow Class A shareholders will receive in the Zillow merger for each share of Zillow Class A common stock will depend on the price per share of Zillow Class A common stock at the time the Zillow merger is completed. That price will not be known at the time of the Zillow special meeting and may be greater or less than the current price of Zillow Class A common stock or the price of Zillow Class A common stock at the time of the special meeting.

Based on the closing price of $158.86 per share of Zillow Class A common stock on NASDAQ on July 25, 2014, the last trading day before the public announcement of the merger agreement, the Zillow Class A merger consideration represented $158.86 per share of Zillow Class A common stock on July 25, 2014. Based on the closing price of $102.46 per share of Zillow Class A common stock on NASDAQ on November 13, 2014, the latest practicable date before the printing of this joint proxy statement/prospectus, the Zillow Class A merger consideration represented $102.46 per share of Zillow Class A common stock.

 

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Q: How do I calculate the value of the Trulia merger consideration?

 

A: Because Holdco will issue a fixed portion of a share of Holdco Class A common stock in exchange for each share of Trulia common stock, the value of the Trulia merger consideration that Trulia stockholders will receive in the Trulia merger for each share of Trulia common stock will depend on the price per share of Zillow Class A common stock at the time the Trulia merger is completed. That price will not be known at the time of the Trulia special meeting and may be greater or less than the current price of Zillow Class A common stock or the price of Zillow Class A common stock at the time of the special meeting.

Based on the closing price of $158.86 per share of Zillow Class A common stock on NASDAQ on July 25, 2014, the last trading day before the public announcement of the merger agreement, the Trulia merger consideration represented approximately $70.53 per share of Trulia common stock, a premium of 25% over the closing price of $56.35 per share of Trulia common stock on the New York Stock Exchange (the “NYSE”), on July 25, 2014. Based on the closing price of $102.46 per share of Zillow Class A common stock on NASDAQ on November 13, 2014, the latest practicable date before the printing of this joint proxy statement/prospectus, the Trulia merger consideration represented approximately $45.49 per share of Trulia common stock.

 

Q: When do you expect the mergers to be completed?

 

A: Zillow and Trulia are working to complete the mergers as quickly as possible, and we anticipate they will be completed in 2015. The mergers are subject to various regulatory approvals and other conditions, however, which are described in more detail in this joint proxy statement/prospectus, and it is possible that factors outside the control of either company could result in the mergers being completed at a later time, or not at all.

 

Q: What are the conditions to the completion of the mergers?

 

A: In addition to both the approval of the merger agreement and the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation by the shareholders of Zillow and the stockholders of Trulia, the completion of the mergers is subject to the satisfaction of a number of other conditions, including expiration or termination of U.S. antitrust waiting periods and the absence of a material adverse effect with respect to each of Zillow and Trulia. For additional information on the regulatory clearances required to complete the mergers, please see “The Mergers — Regulatory Approvals” beginning on page 144. For further information on the conditions to the completion of the mergers, please see “The Merger Agreement — Conditions to the Mergers” beginning on page 169. For further information on the nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, please see “Proposal No. 2: Approval of Authorization of Nonvoting Class C Capital Stock in Holdco’s Amended and Restated Articles of Incorporation by Zillow Shareholders and Trulia Stockholders” beginning on page 179.

 

Q: What effects will the mergers have on Zillow and Trulia?

 

A: Upon completion of the mergers, each of Zillow and Trulia will cease to be a publicly traded company and will be wholly owned by Holdco, which means that Holdco will be the only shareholder of Zillow and the only stockholder of Trulia. As a result, you will own shares in Holdco only and will not directly own any shares in Zillow or Trulia. Following completion of the mergers, the registration of Zillow’s Class A common stock and Trulia’s common stock and their reporting obligations with respect to their common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be terminated. In addition, following completion of the mergers, shares of Zillow Class A common stock will no longer be quoted on NASDAQ or any other stock exchange or quotation system, and shares of Trulia common stock will no longer be quoted on the NYSE or any other stock exchange or quotation system. Although you will no longer be a shareholder of Zillow or a stockholder of Trulia, as applicable, you will have an indirect interest in both Zillow and Trulia through your ownership of Holdco common stock. If you become a Holdco shareholder, you can expect that the value of your investment will depend, among other things, on the performance of both Zillow and Trulia and Holdco’s ability to integrate the two companies.

 

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Q: What effects will the mergers have on Holdco?

 

A: Upon completion of the mergers, Holdco will become the holding company of Zillow and Trulia and will become a new public company. As a condition to closing, the shares of Holdco Class A common stock issued in connection with the mergers must be authorized for listing on NASDAQ.

 

Q: What is the purpose of authorizing Holdco Class C capital stock?

 

A: The authorization of the Holdco Class C capital stock in Holdco’s amended and restated articles of incorporation provides Holdco with the flexibility to issue Holdco Class C capital stock in the future without diluting the relative voting interests of holders of Holdco Class A common stock and Holdco Class B common stock. Although Holdco presently has no specific plans, arrangements, or understanding for the issuance of Holdco Class C capital stock following the mergers, the Holdco Class C capital stock could, for example, be used in the future to raise equity capital, make strategic acquisitions for stock, and contribute to existing and future employee benefit and equity incentive plans used to attract, retain and motivate employees of Holdco, Zillow and Trulia. The Holdco Class C capital stock could also be used in connection with stock dividends or stock splits, convertible debt offerings, and other uses as are permissible under Holdco’s charter documents and governing law.

The Zillow board and the Trulia board believe that providing the Holdco board with the flexibility to issue nonvoting Holdco Class C capital stock in the future for any of the purposes described above and other corporate purposes would facilitate continued growth while enabling Holdco to be managed based on long-term objectives. This is a guiding principle upon which Zillow has been managed since its inception. The Zillow board and the Trulia board believe that authorization of the Holdco Class C capital stock provides the Holdco board with additional flexibility to continue to pursue long-term objectives and is therefore in the best interests of Zillow shareholders and Trulia stockholders, respectively, and Holdco shareholders following the mergers.

As discussed in “Proposal No. 2: Approval of Authorization of Nonvoting Class C Capital Stock in Holdco’s Amended and Restated Articles of Incorporation by Zillow Shareholders and Trulia Stockholders—Interests of Certain Persons”, upon closing of the mergers, Mr. Barton’s holdings and Mr. Frink’s holdings would represent approximately 33% and 22%, respectively, of the voting power of Holdco’s capital stock based on the outstanding shares of Zillow and Trulia as of October 9, 2014 and assuming no Zillow or Trulia stock options, restricted stock units, stock appreciation rights, or convertible notes are exercised, settled, or converted, as applicable, between October 9, 2014 and the effective times of the mergers. As a result, as of the closing of the mergers, Zillow’s founders will have the ability to elect all of Holdco’s directors and to determine the outcome of most matters submitted for a vote of Holdco shareholders. If the Holdco board elects to issue Holdco Class C capital stock in the future, any such issuances would not dilute the voting power of the holders of Holdco’s Class A common stock or Class B common stock, which could have the effect of prolonging the duration of the Zillow founders’ voting control of Holdco.

 

Q: What happens if the mergers are not completed?

 

A: If the merger agreement is not approved by the Zillow shareholders or adopted by the Trulia stockholders, or if the mergers are not completed for any other reason, neither Zillow shareholders nor Trulia stockholders will receive any merger consideration for their shares of Zillow common stock or Trulia common stock pursuant to the merger agreement or otherwise. Instead, Zillow and Trulia will remain separate public companies, and each company expects that its common stock will continue to be registered under the Exchange Act and traded on NASDAQ and the NYSE, respectively. If the merger agreement is terminated in certain specified circumstances, Zillow or Trulia, as applicable, would be required to pay the other a termination fee of $69.8 million. In addition, the merger agreement provides that, in certain other specified circumstances, Zillow would be required to pay Trulia a termination fee of $150 million. See “The Merger Agreement — Termination Fees; Expenses” for additional information, beginning on page 172.

 

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Q: Where can I find information about Zillow and Trulia?

 

A: You can find information about Zillow and Trulia by reading this joint proxy statement/prospectus and the documents described in the section entitled “Where You Can Find More Information” beginning on page 223.

 

Q: What will happen to stock options and other stock awards to acquire Zillow Class A common stock?

 

A: Generally, each Zillow stock option and restricted stock unit that is outstanding (whether or not vested or exercisable) as of the effective time of the Zillow merger will be assumed by Holdco and converted into awards of Holdco Class A common stock and will remain subject to the same terms, conditions and restrictions as the original option or award. Any unvested shares of Zillow Class A common stock that are subject to a repurchase option, risk of forfeiture or other condition as of the effective time of the Zillow merger will be exchanged for shares of Holdco Class A common stock that will also be unvested and subject to the same repurchase option, risk of forfeiture or other condition. Each Zillow restricted unit that is outstanding as of the effective time of the Zillow merger will be assumed by Holdco and converted into the right to receive Holdco Class A common stock and will remain subject to the same terms, conditions and restrictions as the original restricted unit. More information on the effects of the Zillow merger on the Zillow stock options and other stock awards may be found in the section entitled “The Merger Agreement — Treatment of Zillow Stock Options, Restricted Stock Units, and Other Stock Awards” beginning on page 155.

 

Q: What will happen to stock options and other stock awards to acquire Trulia common stock?

 

A: Generally, each Trulia stock option, restricted stock unit, and stock appreciation right that is outstanding (whether or not vested or exercisable) as of the effective time of the Trulia merger will be assumed by Holdco and converted into awards of Holdco Class A common stock and will remain subject to the same terms, conditions and restrictions as the original option or award, subject to specified adjustments to reflect the effect of the Trulia exchange ratio. Each outstanding unvested Trulia stock option and restricted stock unit held by a member of the Trulia board of directors who is not an employee of Trulia or any subsidiary of Trulia will become fully vested immediately prior to the effective time of the Trulia merger in accordance with the terms of the applicable award agreements. More information on the effects of the Trulia merger on the Trulia stock options and other stock awards may be found in the section entitled “The Merger Agreement — Treatment of Trulia Stock Options, Restricted Stock Units, and Other Stock Awards” beginning on page 156.

 

Q: What vote is required to approve each Zillow proposal?

 

A: Proposal to Approve the Merger Agreement by Zillow Shareholders: Approving the merger agreement requires the affirmative vote of the holders of at least a majority of the voting power of the shares of Zillow Class A common stock and Zillow Class B common stock outstanding as of the Zillow record date (as defined below) and entitled to vote thereon, voting together as a single voting group. A Zillow shareholder’s failure to submit a proxy card or to vote in person at the Zillow special meeting, an abstention from voting, or failure of a Zillow shareholder who holds his, her or its shares in “street name” through a broker, bank, or other nominee to give voting instructions to the broker, bank, or nominee will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

Proposal to Approve the Authorization of Nonvoting Class C Capital Stock by Zillow Shareholders: Approving the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires that the number of votes cast “FOR” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as single voting group, exceeds the number of votes cast “AGAINST” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group. Abstentions, broker non-votes and shares not in attendance at the Zillow special meeting will have no effect on the outcome of the vote to approve the authorization of

 

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the nonvoting stock in Holdco’s amended and restated articles of incorporation. If this Proposal No. 2 to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation is not approved by Zillow shareholders, the mergers will not be completed, even if the proposal to approve the merger agreement (Proposal No. 1) is approved.

Proposal to Approve the Adjournment of the Zillow Special Meeting: Approving the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires that the number of votes cast “FOR” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as single voting group, exceeds the number of votes cast “AGAINST” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group. Abstentions, broker non-votes and shares not in attendance at the Zillow special meeting will have no effect on the outcome of any vote to adjourn the Zillow special meeting.

In connection with entering into the merger agreement, Richard Barton and Lloyd Frink, Zillow’s founders, in their individual capacities, entered into a voting agreement with each other (the “Zillow voting agreement”) pursuant to which they agreed to, among other things, vote their shares of Zillow common stock in favor of the merger agreement and in favor of approval of the mergers and any other transactions contemplated by the merger agreement. As of the Zillow record date, Messrs. Barton and Frink together beneficially owned and were entitled to vote 38,401 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock, or approximately 64% of the voting power of Zillow common stock outstanding on that date. As a result of their beneficial ownership and voting control of more than a majority of the outstanding voting power of the shares of Zillow Class A common stock and Zillow Class B common stock, Messrs. Barton and Frink will have the power to approve each of the Zillow proposals without the affirmative vote of any other Zillow shareholder.

 

Q: What vote is required to approve each Trulia proposal?

 

A: Proposal to Adopt the Merger Agreement by Trulia Stockholders: Adopting the merger agreement requires the affirmative vote of the holders of a majority of the shares of Trulia common stock outstanding and entitled to vote on that proposal. A Trulia stockholder’s failure to submit a proxy card or to vote in person at the Trulia special meeting, an abstention from voting, or failure of a Trulia stockholder who holds his, her or its shares in “street name” through a broker, bank or other nominee to give voting instructions to the broker, bank, or other nominee will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

Proposal to Approve the Authorization of Nonvoting Class C Capital Stock by Trulia Stockholders: Approving the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires the affirmative vote of holders of a majority of the shares of Trulia common stock present, in person or by proxy, at the Trulia special meeting and entitled to vote on that proposal. Abstentions will have the same effect as a vote “AGAINST” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, while broker non-votes and shares not in attendance at the Trulia special meeting will have no effect on the outcome of the vote to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation. If this Proposal No. 2 to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation is not approved by Trulia stockholders, the mergers will not be completed, even if the proposal to adopt the merger agreement (Proposal No. 1) is approved.

Proposal to Approve the Adjournment of the Trulia Special Meeting: Approving the adjournment of the Trulia special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires the affirmative vote of holders of a

 

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majority of the shares of Trulia common stock present, in person or by proxy, at the Trulia special meeting and entitled to vote on that proposal. Abstentions will have the same effect as a vote “AGAINST” the proposal to approve the adjournment proposal, while broker non-votes and shares not in attendance at the Trulia special meeting will have no effect on the outcome of any vote to adjourn the Trulia special meeting.

 

Q: What is the recommendation of the Zillow board of directors?

 

A: The Zillow board unanimously (1) adopted the merger agreement and approved the transactions contemplated by the merger agreement, upon the terms and subject to the conditions set forth in the merger agreement, (2) determined that the mergers are fair to, and in the best interests of, Zillow and its shareholders, (3) authorized management to take such actions as are necessary or advisable to effect the transactions contemplated by the merger agreement, including submitting the merger agreement to the Zillow shareholders for approval at the Zillow special meeting, and (4) recommended that Zillow shareholders approve the merger agreement.

The Zillow board unanimously recommends that Zillow shareholders vote:

 

    “FOR” the proposal to approve the merger agreement;

 

    “FOR” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    “FOR” the proposal to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

 

Q: What is the recommendation of the Trulia board of directors?

 

A: The Trulia board (1) determined that the merger agreement and the Trulia merger are in the best interests of Trulia and its stockholders, (2) approved the merger agreement and the transactions contemplated by the merger agreement, including the Trulia merger, and declared the merger agreement advisable, (3) recommended that the Trulia stockholders adopt the merger agreement, and (4) directed that the merger agreement be submitted for consideration by the Trulia stockholders at the Trulia special meeting.

The Trulia board recommends that Trulia stockholders vote:

 

    “FOR” the proposal to adopt the merger agreement;

 

    “FOR” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    “FOR” the proposal to approve the adjournment of the Trulia special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

 

Q: What are the positive and negative factors that the Zillow board considered in connection with the mergers?

 

A:

The Zillow board considered the following positive factors, among others: (1) the fact that Trulia’s business and operations complement those of Zillow, (2) the fact that Trulia’s earnings, and the synergies potentially available in the mergers (which are expected to be at least $100 million in annualized cost savings by 2016), create the opportunity for the combined company, through Holdco, to have superior future earnings and prospects compared to Zillow’s future earnings and prospects on a stand-alone basis, (3) the expectation that the mergers would be accretive to non-GAAP earnings per share in the first full fiscal year following the closing, and (4) holders of Zillow Class A common stock will receive registered shares of Holdco Class A common stock pursuant to the Zillow merger, the potential that the value of Holdco common stock will increase after the completion of the mergers and that Zillow shareholders would share in any increase in that value. The Zillow board also considered the following factors and potential risks associated with the

 

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  mergers, among others: (1) the difficulty inherent in integrating the business, assets and workforces of two large public companies and the risk that the cost savings, synergies and other benefits expected to be obtained in the transactions contemplated by the merger agreement might not be fully realized, (2) the possibility of significant costs and delays resulting from seeking regulatory approvals necessary to complete the transactions contemplated by the merger agreement, (3) the possibility that the mergers may not be completed if such approvals are not obtained, and (4) the potential negative impacts on Zillow, its business and its Class A common stock price if such approvals are not obtained. See “The Mergers — Recommendation of the Zillow Board; Zillow’s Reasons for the Merger” beginning on page 102.

 

Q: What are the positive and negative factors that the Trulia board considered in connection with the mergers?

 

A: The Trulia board considered the following positive factors, among others: (1) the fact that Trulia’s business and operations complement those of Zillow, (2) the expected synergies to be realized by the combined company, and the opportunity of the combined company, through Holdco, to have superior future earnings and prospects compared to Trulia’s future earnings and prospects on a stand-alone basis, (3) the fact that holders of Trulia common stock will receive registered shares of Holdco Class A common stock pursuant to the Trulia merger, (4) the potential that the value of Holdco Class A common stock will increase after the completion of the mergers, and the participation of Trulia stockholders in any increase in that value, (5) the value of the consideration to be received by Trulia stockholders as a result of the Trulia merger and the relationship between the current and historical market values of the Trulia common stock, including the premium to the unaffected price of Trulia common stock and the percentage of the combined company that Trulia stockholders would own following the mergers and (6) the terms and conditions of the merger agreement, including the extent of Zillow’s commitments to obtain the required regulatory approvals for the mergers, the ability of Trulia to negotiate with third parties concerning certain unsolicited competing acquisition proposals if Trulia were to receive such a proposal prior to the adoption of the merger agreement by the Trulia stockholders, and to terminate the merger agreement to accept a superior proposal under certain circumstances, and the termination fees and circumstances under which such fees are payable to Trulia. The Trulia board also considered the following factors and potential risks associated with the mergers, among others: (1) the fact that the exchange ratio is fixed, which means that Trulia stockholders could be adversely affected by a decrease in the trading price of Zillow Class A common stock during the pendency of the transaction, (2) the fact that Trulia stockholders will receive Holdco Class A common stock in the Trulia merger, which is the lower vote common stock in Holdco’s capital structure, (3) the possibility of significant costs and delays resulting from seeking regulatory approvals necessary to complete the transactions contemplated by the merger agreement, the possibility that the transactions may not be completed if such approvals are not obtained, and the potential negative impacts on Trulia, its business, and the price of Trulia common stock if such approvals are not obtained, (4) the fact that the integration of Trulia and Zillow may be complex and time consuming and may require substantial resources and effort, and the risk that if Holdco is not successfully integrated, the anticipated benefits of the mergers may not be realized fully or at all or may take longer to realize than expected, and (5) the possibility that anticipated strategic and other benefits to Trulia and the combined company through Holdco following completion of the mergers, including the expected synergies, will not be realized or will take longer to realize than expected. See “The Mergers — Recommendation of the Trulia Board; Trulia’s Reasons for the Merger” beginning on page 117.

 

Q: Who will be on the Holdco board of directors following completion of the mergers?

 

A:

Effective as of immediately after the Zillow merger, the Holdco board will have ten members and include all of the individuals who are directors of Zillow immediately prior to the Zillow merger of which there are eight as of the date of this joint proxy statement/prospectus and two individuals who are then directors of Trulia. The merger agreement provides that the two Trulia board designees will be mutually agreed to by Trulia and Zillow before completion of the mergers. As of the date of this joint proxy statement/prospectus, Trulia and Zillow

 

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  have determined that one of the Trulia board designees will be Peter Flint and no determination has been made as to the identity of the other Trulia board designee. The Trulia board designees are expected to be finally determined by Trulia and Zillow no later than 30 days prior to the completion of the mergers.

 

Q: What are the material U.S. federal income tax consequences to Zillow shareholders and Trulia stockholders of the mergers?

 

A: Shearman & Sterling LLP, counsel to Zillow (“Shearman & Sterling”), and Goodwin Procter LLP, counsel to Trulia (“Goodwin Procter”), are of the opinion that each of the mergers will be treated for U.S. federal income tax purposes as a “reorganization” within the meaning of section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, a U.S. holder of either Zillow common stock or Trulia common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of such U.S. holder’s shares of Zillow common stock or Trulia common stock for shares of Holdco common stock pursuant to the mergers, except with respect to cash received in lieu of fractional shares of Holdco common stock.

 

Q: Are Zillow shareholders entitled to appraisal or dissenters’ rights?

 

A: Yes. Under Washington corporate law, holders of Zillow common stock are entitled to exercise dissenters’ rights in connection with the Zillow merger. More information on dissenters’ rights may be found in the section entitled “The Mergers — Appraisal/Dissenters’ Rights” beginning on page 148.

 

Q: Are Trulia stockholders entitled to appraisal rights?

 

A: No. Under Delaware corporate law, holders of Trulia common stock are not entitled to appraisal rights in connection with the Trulia merger.

 

Q: If the mergers are completed, when can I expect to receive the Zillow merger consideration for my shares of Zillow common stock?

 

A: As soon as reasonably practicable after the effective time of the Zillow merger, Holdco will cause an exchange agent to mail to each holder of record of Zillow common stock immediately prior to the effective time of the Zillow merger a form of letter of transmittal and instructions for use in effecting the exchange of Zillow common stock for the Zillow merger consideration. After receiving the proper documentation from a holder of Zillow common stock, the exchange agent will deliver the Holdco common stock (and cash in lieu of any fractional share of Holdco common stock) to which the holder is entitled under the merger agreement. More information on the exchange of Zillow common stock may be found in the section entitled “The Mergers — Exchange of Certificates; No Fractional Shares” beginning on page 142.

 

Q: If the mergers are completed, when can I expect to receive the Trulia merger consideration for my shares of Trulia common stock?

 

A: As soon as reasonably practicable after the effective time of the Trulia merger, Holdco will cause an exchange agent to mail to each holder of record of Trulia common stock immediately prior to the effective time of the Trulia merger a form of letter of transmittal and instructions for use in effecting the exchange of Trulia common stock for the Trulia merger consideration. After receiving the proper documentation from a holder of Trulia common stock, the exchange agent will deliver the Holdco common stock (and cash in lieu of any fractional share of Holdco common stock) to which the holder is entitled under the merger agreement. More information on the exchange of Trulia common stock may be found in the section entitled “The Mergers — Exchange of Certificates; No Fractional Shares” beginning on page 142.

 

Q: What happens if I sell my shares of Zillow common stock or Trulia common stock before the applicable special meeting?

 

A:

The record date for the Zillow special meeting (the “Zillow record date”) and the record date for the Trulia special meeting (the “Trulia record date”) are earlier than the date of the special meetings and the date that

 

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  the mergers are expected to be completed. If you transfer your shares after the applicable record date, but before the applicable special meeting, unless the transferee requests a proxy, you will retain your right to vote at the special meeting, but you will have transferred to the transferee the right to receive the Zillow merger consideration or the Trulia merger consideration, as applicable, in the mergers. In order to receive the Zillow merger consideration or the Trulia merger consideration, as applicable, you must hold your shares through the completion of the mergers.

 

Q: What happens if I sell my shares of Zillow common stock or Trulia common stock after the applicable special meeting, but before the completion of the mergers?

 

A: If you transfer your shares after the applicable special meeting, but before the completion of the mergers, you will have transferred the right to receive the Zillow merger consideration or the Trulia merger consideration, as applicable, in the mergers. In order to receive the Zillow merger consideration or the Trulia merger consideration, as applicable, you must hold your shares of Zillow common stock or Trulia common stock, as applicable, through the completion of the mergers.

About the Special Meetings

 

Q: When and where will the Zillow and Trulia special meetings be held?

 

A: Zillow: The Zillow special meeting will be held at the offices of Perkins Coie LLP, 1201 Third Avenue, 48th Floor, Seattle, Washington 98101 on December 18, 2014, at 8:00 a.m. Pacific time, unless the Zillow special meeting is adjourned or postponed.

Trulia: The Trulia special meeting will be held at 535 Mission Street, Suite 700, San Francisco, California 94105 on December 18, 2014, at 8:00 a.m. Pacific time, unless the Trulia special meeting is adjourned or postponed.

 

Q: What constitutes a quorum?

 

A: Zillow Special Meeting: A quorum is the minimum number of shares required to be present at the Zillow special meeting for the meeting to be properly held under Zillow’s amended and restated bylaws and Washington law. The presence, in person or represented by proxy, of holders of a majority of the total votes entitled to be cast at the Zillow special meeting will constitute a quorum at the meeting. In the absence of a quorum, a majority of the votes represented at the Zillow special meeting, present in person or represented by proxy, will have the power to adjourn the Zillow special meeting.

Trulia Special Meeting: A quorum is the minimum number of shares required to be present at the Trulia special meeting for the meeting to be properly held under Trulia’s amended and restated bylaws and Delaware law. The presence, in person or represented by proxy, of holders of a majority of all issued and outstanding shares of common stock entitled to vote at the Trulia special meeting will constitute a quorum at the meeting. In the absence of a quorum, the chairperson of the Trulia special meeting or the holders of Trulia common stock entitled to vote at the Trulia special meeting, present in person or represented by proxy, will have the power to adjourn the Trulia special meeting.

 

Q: Who is entitled to vote at the Zillow and Trulia special meetings?

 

A: Zillow Special Meeting: Only holders of record of shares of Zillow common stock at the close of business on the Zillow record date of November 5, 2014, will be entitled to vote at the Zillow special meeting. As of the Zillow record date, there were 34,446,019 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock outstanding and entitled to vote at the Zillow special meeting.

Trulia Special Meeting: Only holders of record of shares of Trulia common stock at the close of business on the Trulia record date of October 27, 2014, will be entitled to vote at the Trulia special meeting. As of the Trulia record date, there were 37,779,430 shares of Trulia common stock outstanding and entitled to vote at the Trulia special meeting.

 

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Q: How many votes do I have?

 

A: Zillow: Each outstanding share of Zillow Class A common stock entitles its holder to cast one vote, and each outstanding share of Zillow Class B common stock entitles its holder to cast ten votes.

Trulia: Each outstanding share of Trulia common stock entitles its holder to cast one vote.

 

Q: What if I hold shares in both Zillow and Trulia?

 

A: If you are both a Zillow shareholder and a Trulia stockholder, you will receive two separate packages of proxy materials. A vote as a Zillow shareholder for the proposal to approve the merger agreement will not constitute a vote as a Trulia stockholder for the proposal to adopt the merger agreement, or vice versa. Therefore, please mark, sign, date, and return all proxy cards that you receive, whether from Zillow or Trulia, or submit proxies as both a Zillow shareholder and a Trulia stockholder over the Internet or by telephone.

 

Q: May I attend the Zillow special meeting?

 

A: Yes. You are entitled to attend the Zillow special meeting if you were a Zillow shareholder of record, or a beneficial owner of Zillow common stock, as of the close of business on the Zillow record date, or you hold a valid proxy for the Zillow special meeting. You should be prepared to present a form of photo identification, such as a driver’s license, and, if your shares are held in “street name,” a copy of a bank or brokerage statement reflecting your stock ownership as of the Zillow record date. For additional information, see “The Zillow Special Meeting — Attending the Zillow Special Meeting” beginning on page 84.

 

Q: May I attend the Trulia special meeting?

 

A: Yes. You are entitled to attend the Trulia special meeting if you were a Trulia stockholder of record, or a beneficial owner of Trulia common stock, as of the close of business on the Trulia record date, or you hold a valid proxy for the Trulia special meeting. You should be prepared to present a form of photo identification, such as a driver’s license, and, if you are a stockholder of record, present the admission ticket included with this joint proxy statement/prospectus. If you hold your shares in “street name,” you need to bring a copy of a bank or brokerage statement reflecting your stock ownership as of the Trulia record date. For additional information, see “The Trulia Special Meeting — Attending the Trulia Special Meeting” beginning on page 90.

 

Q: My shares are held in “street name” by my broker. Will my broker automatically vote my shares for me?

 

A: No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of the shares held for you in what is known as “street name.” If this is the case, this joint proxy statement/prospectus has been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial owner, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.”

Under the Delaware General Corporation Law (the “DGCL”) and the Washington Business Corporation Act (the “WBCA”), broker non-votes will not be counted for purposes of determining the presence or absence of a quorum at the Zillow special meeting or the Trulia special meeting. Further, under the current rules of NASDAQ and the NYSE, brokers do not have discretionary authority to vote on any of the Zillow proposals or any of the Trulia proposals. To the extent there are any broker non-votes, a broker non-vote will have the same effect as a vote “AGAINST” the proposals to approve and adopt the merger agreement, as applicable, but will have no effect on the other proposals.

 

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Q: What do I need to do now?

 

A: Read and consider the information contained in this joint proxy statement/prospectus carefully, and then please vote your shares as soon as possible so that your shares may be represented at the applicable special meeting.

 

Q: How do I vote?

 

A: If you are a registered holder of record, you can vote in person by completing a ballot at your company’s special meeting, or you can vote by proxy before the special meeting. Even if you plan to attend your company’s special meeting, we encourage you to vote your shares by proxy as soon as possible. After carefully reading and considering the information contained in this joint proxy statement/prospectus, please submit your proxy by telephone or over the Internet in accordance with the instructions set forth on the enclosed proxy card, or mark, sign, and date the proxy card and return it in the enclosed postage-paid envelope as soon as possible so that your shares may be voted at your company’s special meeting.

If your shares of Zillow common stock or Trulia common stock are held in a brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares, and you may vote by following the instructions provided by the bank, broker or other nominee holding your shares. Since a beneficial owner is not a shareholder or stockholder of record, you may not vote your shares in person at your company’s special meeting unless you obtain a legal proxy from the bank, broker or nominee that holds your shares, giving you the right to vote the shares at the applicable special meeting.

For detailed information, see “The Zillow Special Meeting — How to Vote” beginning on page 83 and “The Trulia Special Meeting — How to Vote” beginning on page 89. YOUR VOTE IS VERY IMPORTANT.

 

Q: What happens if I do not indicate how to vote on my proxy card?

 

A: If you are a registered holder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy as recommended by the Zillow board, in the case of Zillow common stock, or as recommended by the Trulia board, in the case of Trulia common stock.

 

Q: Can I change my vote after I have submitted a proxy by telephone or over the Internet or submitted my completed proxy card?

 

A: Yes. Shareholders of record may revoke a proxy at any time before it is exercised at the Zillow special meeting or the Trulia special meeting, as applicable. To do this, you must:

 

    enter a new vote by telephone or over the Internet by the date and time indicated on the applicable proxy card or voter instruction form;

 

    deliver another duly executed proxy card or voter instruction form bearing a later date to the addressee named in the proxy card or voter instruction form prior to the vote at the applicable special meeting;

 

    in the case of the Zillow special meeting, provide written notice of the revocation to Zillow’s Corporate Secretary at Zillow, Inc., 1301 Second Avenue, Floor 31, Seattle, Washington 98101;

 

    in the case of the Trulia special meeting, provide written notice of the revocation to Trulia’s Corporate Secretary at Trulia, Inc., 535 Mission Street, Suite 700, San Francisco, California 94105; or

 

    attend the Zillow special meeting or the Trulia special meeting, as applicable, and vote in person (your attendance at the meeting will not, by itself, revoke your proxy; you must vote in person at the meeting).

If your shares are held in “street name,” you must contact your broker, bank or nominee to revoke and vote your proxy. If you have questions about how to vote or revoke your proxy, you should contact Zillow’s proxy solicitor, Georgeson Inc., toll-free at (800) 868-1391, or Trulia’s proxy solicitor, MacKenzie Partners, Inc., toll-free at (800) 322-2885 or collect at (212) 929-5500, as applicable.

 

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Q: What should shareholders or stockholders do if they receive more than one set of voting materials for a special meeting?

 

A: You may receive more than one set of voting materials for a special meeting, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. Please complete, sign, date, and return each proxy card and voting instruction form that you receive. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card.

 

Q: How can I find out the results of the votes?

 

A: Each of Zillow and Trulia will publicly announce final voting results as promptly as practicable after the applicable special meeting is completed. Preliminary voting results may be announced at the special meetings.

 

Q: Who is paying for this proxy solicitation?

 

A: Zillow will bear the entire cost of soliciting proxies from Zillow shareholders and Trulia will bear the entire cost of soliciting proxies from Trulia stockholders, except that Zillow and Trulia will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus and Zillow will pay the expenses relating to the filing fee incurred in filing the Registration Statement on Form S-4 and all amendments thereto with the Securities and Exchange Commission (the “SEC”). In addition to this mailing, each of Zillow’s and Trulia’s directors, officers, and employees (who will not receive any additional compensation for those services) may solicit proxies. Solicitation of proxies will be undertaken through mail, in person, by telephone, and via the Internet and video conference. Each of Zillow and Trulia may also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their expenses incurred in forwarding proxy and solicitation materials to the beneficial owners of Zillow common stock and Trulia common stock, as applicable, and in obtaining voting instructions from those beneficial owners.

 

Q: Whom should I call if I have questions about the proxy materials or voting procedures?

 

A: If you have questions about the mergers, or if you need assistance in submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact the proxy solicitation agent for the company in which you hold shares.

If you are a Zillow shareholder, you should contact Georgeson Inc., the proxy solicitation agent for Zillow, by mail at 480 Washington Boulevard, 26th Floor, Jersey City, New Jersey 07310, by telephone at (800) 868-1391 (toll-free), or by email at Zillow@Georgeson.com.

If you are a Trulia stockholder, you should contact MacKenzie Partners, Inc., the proxy solicitation agent for Trulia, by mail at 105 Madison Avenue, New York, New York 10016, by telephone at (800) 322-2885 (toll-free) or (212) 929-5500 (collect), or by email at proxy@mackenziepartners.com.

If your shares are held in a stock brokerage account or by a bank or other nominee, you should contact your broker, bank or other nominee for additional information.

 

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SUMMARY

The following summary highlights selected information from this joint proxy statement/prospectus and may not contain all of the information that may be important to you. Accordingly, shareholders of Zillow and stockholders of Trulia are encouraged to carefully read this entire joint proxy statement/prospectus, its annexes, and the documents referred to or incorporated by reference in this joint proxy statement/prospectus. Items in this summary include cross references directing you to a more complete description of that item. Please see “Where You Can Find More Information” beginning on page 223.

Information About the Companies (page 80)

Zillow, Inc.

Zillow, Inc. was incorporated as a Washington corporation effective December 13, 2004, and launched the initial version of its website, Zillow.com, in February 2006. Zillow operates the leading real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and products to help people find vital information about homes and connect with local professionals. Zillow’s principal executive offices are located at 1301 Second Avenue, Floor 31, Seattle, Washington 98101, and its telephone number is (206) 470-7000. Zillow’s website address is www.zillow.com. In addition, Zillow maintains a Facebook page at www.facebook.com/zillow and a twitter feed at www.twitter.com/zillow. Information contained on, or that can be accessed through, Zillow’s website, Facebook page or twitter feed does not constitute part of this joint proxy statement/prospectus and inclusions of its website address, Facebook page address and twitter feed address in this joint proxy statement/prospectus are inactive textual references only.

Trulia, Inc.

Trulia, Inc. was incorporated as a Delaware corporation effective June 1, 2005 as Realwide, Inc. On September 22, 2005, it changed its name to Trulia, Inc. Trulia’s online marketplace and mobile applications help consumers research homes and neighborhoods and provide a broad array of information to help them in the buying and selling processes. Trulia also helps real estate professionals market themselves and their listings. Trulia’s subscription-based real estate marketing and software products provide real estate professionals with access to transaction-ready consumers and help them grow and manage their businesses. Trulia’s principal executive offices are located at 535 Mission Street, Suite 700, San Francisco, CA 94105, and its telephone number is (415) 648-4358. Trulia’s website address is www.trulia.com. Information contained on, or that can be accessed through, Trulia’s website does not constitute part of this joint proxy statement/prospectus, and inclusion of Trulia’s website address in this joint proxy statement/prospectus is an inactive textual reference only.

Zebra Holdco, Inc.

Zebra Holdco, Inc. was incorporated as a Washington corporation effective July 25, 2014, solely for the purpose of effecting the mergers. As described below in “— The Mergers” and more fully in “The Mergers” and “The Merger Agreement,” following the completion of the mergers, Zillow and Trulia will each become a wholly owned subsidiary of Holdco. Holdco intends to apply to list its Class A common stock on NASDAQ under the symbol “Z,” subject to official notice of issuance. Holdco’s principal executive offices are located at 1301 Second Avenue, Floor 31, Seattle, Washington 98101, and its telephone number is (206) 470-7000.

The Mergers and the Merger Agreement (pages 93 and 154)

Zillow, Holdco and Trulia have entered into the merger agreement providing for Zillow’s acquisition of Trulia under a new holding company, Holdco. As a result of the transactions contemplated by the merger

 

 

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agreement, former Zillow shareholders and former Trulia stockholders will own stock in Holdco, the Class A common stock of which is expected to be listed for trading on NASDAQ. Pursuant to the merger agreement, Zillow Merger Sub will be merged with and into Zillow, and Trulia Merger Sub will be merged with and into Trulia. As a result of the mergers, Zillow and Trulia will each become a wholly owned subsidiary of Holdco.

Merger Consideration to Be Received by Zillow Shareholders (page 155)

Upon completion of the Zillow merger, (1) each outstanding share of Zillow Class A common stock, other than the Zillow excluded shares (as defined below) and Zillow dissenting shares, will be converted into the right to receive one share of fully paid and nonassessable Holdco Class A common stock and (2) each outstanding share of Zillow Class B common stock, other than the Zillow excluded shares and Zillow dissenting shares, will be converted into the right to receive one share of fully paid and nonassessable Holdco Class B common stock. Shares of Zillow common stock held by Zillow, Holdco, Trulia or any direct or indirect wholly owned subsidiary of Zillow or Trulia (the “Zillow excluded shares”) will be canceled and will not be converted into any shares of Holdco common stock or other consideration.

Zillow shareholders will not receive any fractional shares of Holdco common stock in the Zillow merger. Instead of receiving any fractional shares, each holder of Zillow common stock will be paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ (as reported in The Wall Street Journal or, if not reported therein, in another authoritative source mutually selected by Zillow and Trulia) on the last complete trading day prior to the date of the effective time of the Zillow merger.

Merger Consideration to Be Received by Trulia Stockholders (page 155)

Upon completion of the Trulia merger, each outstanding share of Trulia common stock, other than the Trulia excluded shares (as defined below), will be converted into the right to receive 0.444 of a share of fully paid and nonassessable Holdco Class A common stock. Shares of Trulia common stock that are held by Trulia, Holdco, Zillow, or any direct or indirect wholly owned subsidiary of Trulia or Zillow (the “Trulia excluded shares”) will be canceled and will not be converted into any shares of Holdco common stock or other consideration.

Trulia stockholders will not receive any fractional shares of Holdco common stock in the Trulia merger. Instead of receiving any fractional shares, each holder of Trulia common stock will be paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ (as reported in The Wall Street Journal or, if not reported therein, in another authoritative source mutually selected by Zillow and Trulia) on the last complete trading day prior to the date of the effective time of the Trulia merger.

Total Holdco Shares to Be Issued

Based on the number of shares of Zillow and Trulia common stock outstanding as of October 9, 2014, and assuming no Zillow or Trulia stock options, restricted stock units, stock appreciation rights, or convertible notes are exercised, settled, or converted, as applicable, between October 9, 2014 and the effective times of the mergers, the total number of shares of Holdco common stock to be issued immediately following completion of the mergers will be approximately 51,188,746 shares of Holdco Class A common stock and 6,217,447 shares of Holdco Class B common stock.

Upon closing of the mergers, the holdings of Zillow’s founders, Richard Barton and Lloyd Frink, would represent approximately 33% and 22%, respectively, of the voting power of Holdco’s capital stock based on the outstanding shares of Zillow and Trulia as of October 9, 2014 and assuming no Zillow or Trulia stock options, restricted stock units, stock appreciation rights, or convertible notes are exercised, settled, or converted, as

 

 

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applicable, between October 9, 2014 and the effective times of the mergers. As a result, as of the closing of the mergers, Zillow’s founders will have the ability to elect all of Holdco’s directors and to determine the outcome of most matters submitted for a vote of Holdco shareholders.

Comparative Per Share Market Price and Dividend Information (page 40)

Holdco common stock is not traded or quoted on a stock exchange or quotation system and, therefore, its common stock does not have a historical market value. As discussed below in “— Listing of Holdco Class A Common Stock,” Holdco intends to apply to have its Class A common stock listed on NASDAQ upon completion of the mergers.

Zillow Class A common stock trades on NASDAQ under the symbol “Z,” and Trulia common stock trades on the NYSE under the symbol “TRLA.” The table below shows the closing prices of Zillow Class A common stock and Trulia common stock as reported on July 25, 2014, the last trading day before the merger agreement was publicly announced, and on November 13, 2014, the last practicable trading day before the date of this joint proxy statement/prospectus. This table also shows the value of the Trulia merger consideration per share of Trulia common stock, which was calculated by multiplying the closing price of the Zillow Class A common stock as of the specified date by the Trulia exchange ratio of 0.444.

 

     Zillow Class A
Common Stock
     Trulia Common Stock      Implied Market Value of
Trulia Common Stock
 

July 25, 2014

   $ 158.86       $ 56.35       $ 70.53   

November 13, 2014

   $ 102.46       $ 43.39       $ 45.49   

The market prices of Zillow Class A common stock and Trulia common stock will fluctuate prior to the completion of the mergers. You should obtain current market quotations for the shares.

The Holdco Class B common stock issuable to holders of outstanding shares of Zillow Class B common stock will not be listed or quoted for trading in any public trading market.

Neither Zillow nor Trulia has paid a cash dividend on its common stock, and neither company has any current intention of doing so.

Zillow Special Meeting (page 80)

Date, Time, and Place

The Zillow special meeting will be held at the offices of Perkins Coie LLP, 1201 Third Avenue, 48th Floor, Seattle, Washington 98101 on December 18, 2014, at 8:00 a.m. Pacific time, unless the Zillow special meeting is adjourned or postponed.

Quorum

A quorum is the minimum number of shares required to be present at the Zillow special meeting for the meeting to be properly held under Zillow’s amended and restated bylaws and Washington law. The presence, in person or represented by proxy, of holders of a majority of the total votes entitled to be cast at the Zillow special meeting will constitute a quorum at the meeting. In the absence of a quorum, a majority of the votes represented at the Zillow special meeting, present in person or represented by proxy, will have the power to adjourn the Zillow special meeting.

Purpose of the Zillow Special Meeting

At the Zillow special meeting, Zillow shareholders will be asked to consider and vote upon the following matters:

 

    a proposal to approve the merger agreement — THE MERGERS WILL ONLY OCCUR IF PROPOSAL NO. 2 IS ALSO APPROVED;

 

 

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    a proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    a proposal to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

Record Date; Shares Entitled to Vote

Only holders of record of shares of Zillow common stock at the close of business on the Zillow record date of November 5, 2014, will be entitled to vote at the Zillow special meeting. Each outstanding share of Zillow Class A common stock entitles its holder to cast one vote, and each outstanding share of Zillow Class B common stock entitles its holder to cast ten votes. As of the Zillow record date, there were 34,446,019 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock outstanding and entitled to vote at the Zillow special meeting.

Vote Required

Approving the merger agreement requires the affirmative vote of the holders of at least a majority of the voting power of the shares of Zillow Class A common stock and Zillow Class B common stock outstanding as of the Zillow record date and entitled to vote thereon, voting together as a single voting group. Accordingly, a Zillow shareholder’s failure to submit a proxy card or to vote in person at the Zillow special meeting, an abstention from voting, or the failure of a Zillow shareholder who holds his, her, or its shares in “street name” through a broker, bank, or other nominee to give voting instructions to such broker, bank, or other nominee will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

Approving the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires that the number of votes cast “FOR” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as single voting group, exceeds the number of votes cast “AGAINST” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group. Accordingly, abstentions, broker non-votes and shares not in attendance at the Zillow special meeting will have no effect on the outcome of the vote to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation. If Proposal No. 2 to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation is not approved by Zillow shareholders, the mergers will not be completed, even if the proposal to adopt the merger agreement (Proposal No. 1) is approved.

Approving the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires that the number of votes cast “FOR” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group, exceeds the number of votes cast against the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group. Accordingly, abstentions, broker non-votes and shares not in attendance at the Zillow special meeting will have no effect on the outcome of any vote to adjourn the Zillow special meeting.

In connection with entering into the merger agreement, Zillow’s founders, Richard Barton and Lloyd Frink, in their individual capacities, entered into the Zillow voting agreement pursuant to which they agreed to, among

 

 

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other things, vote their shares of Zillow common stock in favor of the merger agreement and in favor of approval of the mergers and any other transactions contemplated by the merger agreement. As of the Zillow record date, Messrs. Barton and Frink together beneficially owned and were entitled to vote 38,401 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock, or approximately 64% of the voting power of Zillow common stock outstanding on that date. As a result of their beneficial ownership and voting control of more than a majority of the outstanding voting power of the shares of Zillow Class A common stock and Zillow Class B common stock, Messrs. Barton and Frink will have the power to approve each of the Zillow proposals without the affirmative vote of any other Zillow shareholder.

Voting by Zillow’s Directors and Executive Officers

As of the Zillow record date, Zillow’s directors and executive officers and certain of their affiliates beneficially owned 1,557,890 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock entitled to vote at the Zillow special meeting. This represents approximately 66% in voting power of the outstanding shares of Zillow common stock entitled to be cast at the Zillow special meeting. Richard Barton and Lloyd Frink, who are Zillow directors and founders, and also own or control all of Zillow’s outstanding Class B common stock, have entered into a voting agreement with each other that obligates them to vote “FOR” the Zillow proposal to approve the merger agreement and the other proposals to be considered at the Zillow special meeting. Additionally, Zillow currently expects that the other Zillow directors and executive officers will vote their shares of Zillow common stock in favor of the Zillow merger agreement proposal and the other proposals to be considered at the Zillow special meeting, although none of them is obligated to do so. See “— Interests of Officers and Directors in the Mergers” and “— Voting Agreements” below.

Trulia Special Meeting (page 87)

Date, Time, and Place

The Trulia special meeting will be held at 535 Mission Street, Suite 700, San Francisco, California 94105 on December 18, 2014, at 8:00 a.m. Pacific time, unless the Trulia special meeting is adjourned or postponed.

Quorum

A quorum is the minimum number of shares required to be present at the Trulia special meeting for the meeting to be properly held under Trulia’s amended and restated bylaws and Delaware law. The presence, in person or represented by proxy, of holders of a majority of all issued and outstanding shares of Trulia common stock entitled to vote at the Trulia special meeting will constitute a quorum at the meeting. In the absence of a quorum, the chairperson of the Trulia special meeting or the holders of Trulia common stock entitled to vote at the Trulia special meeting, present in person or represented by proxy, will have the power to adjourn the Trulia special meeting.

Purpose of the Trulia Special Meeting

At the Trulia special meeting, Trulia stockholders will be asked to consider and vote upon the following matters:

 

    a proposal to adopt the merger agreement — THE MERGERS WILL ONLY OCCUR IF PROPOSAL NO. 2 IS ALSO APPROVED;

 

    a proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    a proposal to approve the adjournment of the Trulia special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

 

 

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Record Date; Shares Entitled to Vote

Only holders of record of shares of Trulia common stock at the close of business on the Trulia record date of October 27, 2014, will be entitled to vote at the Trulia special meeting. Each outstanding share of Trulia common stock entitles its holder to cast one vote. As of the Trulia record date, there were 37,779,430 shares of Trulia common stock outstanding and entitled to vote at the Trulia special meeting.

Vote Required

Adopting the merger agreement requires the affirmative vote of holders of a majority of the shares of Trulia common stock outstanding and entitled to vote on that proposal. Accordingly, a Trulia stockholder’s failure to submit a proxy card or to vote in person at the Trulia special meeting, an abstention from voting, or the failure of a Trulia stockholder who holds his, her, or its shares in “street name” through a broker, bank, or other nominee to give voting instructions to such broker, bank, or other nominee will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

Approving the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires the affirmative vote of holders of a majority of the shares of Trulia common stock present, in person or by proxy, at the Trulia special meeting and entitled to vote on that proposal. Accordingly, abstentions will have the same effect as a vote “AGAINST” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, while broker non-votes and shares not in attendance at the Trulia special meeting will have no effect on the outcome of any vote to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation. If Proposal No. 2 to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation is not approved by Trulia stockholders, the mergers will not be completed, even if the proposal to adopt the merger agreement (Proposal No. 1) is approved.

Approving the adjournment of the Trulia special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires the affirmative vote of holders of a majority of the shares of Trulia common stock present, in person or by proxy, at the Trulia special meeting and entitled to vote on the adjournment proposal. Accordingly, abstentions will have the same effect as a vote “AGAINST” the adjournment proposal, while broker non-votes and shares not in attendance at the Trulia special meeting will have no effect on the outcome of any vote to adjourn the Trulia special meeting.

Voting by Trulia’s Directors and Executive Officers

As of the Trulia record date, Trulia’s directors and executive officers and certain of their affiliates beneficially owned 2,461,276 shares of Trulia common stock entitled to vote at the Trulia special meeting. This represents approximately 7% in voting power of the outstanding shares of Trulia common stock entitled to be cast at the Trulia special meeting. Trulia directors Peter Flint, Erik Bardman, Theresia Gouw, Daniel Stephen Hafner, Robert Moles, and Gregory Waldorf, who together as of the Trulia record date owned approximately 5% of the shares of Trulia common stock outstanding, have each entered into voting agreements with Zillow that obligate them to vote “FOR” the Trulia proposal to adopt the merger agreement and the other proposals to be considered at the Trulia special meeting. Additionally, Trulia currently expects that the other Trulia directors and executive officers will vote their shares of Trulia common stock in favor of the Trulia merger agreement proposal and the other proposals to be considered at the Trulia special meeting, although none of them is obligated to do so. See “— Interests of Officers and Directors in the Mergers” and “— Voting Agreements” below.

 

 

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Recommendation of the Zillow Board (page 102)

The Zillow board unanimously (1) adopted the merger agreement and approved the transactions contemplated by the merger agreement, upon the terms and subject to the conditions set forth in the merger agreement, (2) determined that the mergers are fair to, and in the best interests of, Zillow and its shareholders, (3) authorized management to take such actions as are necessary or advisable to effect the transactions contemplated by the merger agreement, including submitting the merger agreement to the Zillow shareholders for approval at the Zillow special meeting, and (4) recommended that Zillow shareholders approve the merger agreement.

The Zillow board unanimously recommends that Zillow shareholders vote:

 

    “FOR” the proposal to approve the merger agreement;

 

    “FOR” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    “FOR” the proposal to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

See “The Mergers — Recommendation of the Zillow Board; Zillow’s Reasons for the Merger.”

Recommendation of the Trulia Board (page 117)

The Trulia board (1) determined that the merger agreement and the Trulia merger are in the best interests of Trulia and its stockholders, (2) approved the merger agreement and the transactions contemplated by the merger agreement, including the Trulia merger, and declared the merger agreement advisable, (3) recommended that the Trulia stockholders adopt the merger agreement, and (4) directed that the merger agreement be submitted for consideration by the Trulia stockholders at the Trulia special meeting.

The Trulia board recommends that Trulia stockholders vote:

 

    “FOR” the proposal to adopt the merger agreement;

 

    “FOR” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    “FOR” the proposal to approve the adjournment of the Trulia special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

See “The Mergers — Recommendation of the Trulia Board; Trulia’s Reasons for the Merger.”

Reasons for Zillow and Trulia to Enter into the Merger Agreement (pages 102 and 117)

The Zillow board believes that the mergers present a strategic opportunity to expand value through a combination with the complementary business of Trulia. See “The Mergers — Recommendation of the Zillow Board; Zillow’s Reasons for the Merger”.

The Trulia board believes that the Trulia merger presents a strategic opportunity to expand value for the Trulia stockholders through a combination with the complementary business of Zillow. See “The Mergers — Recommendation of the Trulia Board; Trulia’s Reasons for the Merger.”

 

 

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Accounting Treatment (page 148)

Zillow prepares its financial statements in accordance with GAAP. The accounting guidance for business combinations requires the use of the acquisition method of accounting for the mergers, which requires the determination of the acquirer, the purchase price, the acquisition date, the fair value of assets and liabilities of the acquiree and the measurement of goodwill. Zillow will be the accounting acquirer in the mergers. See “The Mergers — Accounting Treatment of the Mergers.”

Opinion of Financial Advisor to Zillow (page 109)

Goldman, Sachs & Co. delivered its opinion to the Zillow board that, as of July 28, 2014 and based upon and subject to the factors and assumptions set forth therein, and taking into account the Trulia merger, the Zillow Class A exchange ratio and the Zillow Class B exchange ratio (together, the “Zillow exchange ratio”) pursuant to the merger agreement was fair from a financial point of view to the holders of Zillow common stock.

The full text of the written opinion of Goldman Sachs, dated July 28, 2014, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D to this joint proxy statement/prospectus and is incorporated by reference herein in its entirety. Goldman Sachs provided its opinion for the information and assistance of the Zillow board in connection with its consideration of the mergers. The Goldman Sachs opinion is not a recommendation as to how any holder of Zillow common stock should vote with respect to the mergers or any other matter. Pursuant to an engagement letter between Zillow and Goldman Sachs, Zillow has agreed to pay Goldman Sachs a transaction fee of $14.0 million plus an additional amount in Zillow’s sole and absolute discretion of up to $2.0 million. Upon the execution of the merger agreement, $5.0 million of the transaction fee became payable, and the remainder is payable upon and is contingent upon the successful completion of the mergers. For purposes of rendering its opinion, Goldman Sachs did not take into account any differential voting or other rights between the Holdco Class A common stock and Holdco Class B common stock.

Opinion of Financial Advisor to Trulia (page 123)

At a meeting of the Trulia board on July 27, 2014, J.P. Morgan Securities LLC rendered its oral opinion to the Trulia board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the Trulia exchange ratio in the proposed mergers was fair, from a financial point of view, to the holders of the Trulia common stock. J.P. Morgan subsequently confirmed its oral opinion by delivering its written opinion, dated July 27, 2014, to the Trulia board. The full text of the written opinion of J.P. Morgan dated July 27, 2014, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex E to this joint proxy statement/prospectus and is incorporated by reference herein in its entirety. Trulia stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion is addressed to the Trulia board, is directed only to the Trulia exchange ratio in the proposed mergers and does not constitute a recommendation to any stockholder of Trulia as to how such stockholder should vote at the Trulia special meeting. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Pursuant to an engagement letter between J.P. Morgan and Trulia, Trulia has agreed to pay J.P. Morgan a transaction fee of 0.75% of the fair market value of the consideration to be paid to the Trulia stockholders in the mergers, $2.0 million of which was payable upon the delivery by J.P. Morgan of its opinion and the remainder of which is payable upon and is contingent upon the consummation of the mergers.

Also, pursuant to an engagement letter between Qatalyst Partners LP and Trulia, Trulia has agreed to pay Qatalyst a transaction fee of 0.75% of the aggregate value of the Trulia merger, which fee is payable upon and is contingent upon the consummation of the Trulia merger.

 

 

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Interests of Officers and Directors in the Mergers (page 133)

Certain of Zillow’s and Trulia’s executive officers and directors may have interests in the mergers that are different from the interests of Zillow shareholders and Trulia stockholders, respectively. Zillow’s executive officers and non-employee directors will receive what Zillow shareholders will receive in the Zillow merger and none of Zillow’s directors or executive officers is a party to or participates in any Zillow plan, program, or arrangement that provides such director or executive officer with any kind of compensation that is based on or otherwise relates to the completion of the mergers.

In connection with the mergers, certain of Trulia’s executive officers will be entitled to partial and/or full “double trigger” equity acceleration upon a termination by Trulia without cause or a resignation for good reason, each within twelve months of the mergers, pursuant to pre-existing offer letters and/or equity award agreements with Trulia, and one of Trulia’s executive officers will be entitled to partial equity acceleration upon a termination by Trulia without cause prior to August 31, 2015, pursuant to a pre-existing agreement with Trulia. With respect to the non-employee directors of Trulia, the vesting of all outstanding stock options and restricted stock units held by such non-employee directors will become accelerated and will fully vest in the mergers, pursuant to Trulia’s pre-existing non-employee director compensation policy. Assuming that the performance conditions applicable to the performance-based restricted stock units held by certain executive officers will be satisfied prior to the closing of the Trulia merger, the estimated value of the equity acceleration that Trulia’s executive officers and non-employee directors may receive in connection with the Trulia merger is as follows: Peter Flint ($13,402,875); Prashant Aggarwal ($11,012,356); Scott Darling ($1,766,716); Daniele Farnedi ($2,274,550); Paul Levine ($11,524,373); Ian Morris ($2,013,734) (which would become vested pursuant to the terms of Mr. Morris’ consulting agreement with Trulia, assuming that he is terminated without cause and regardless of whether the performance conditions are satisfied); Robert Moles ($161,280); Theresia Gouw ($161,280); Sami Inkinen ($161,280); Erik Bardman ($322,622); Gregory Waldorf ($322,622); and Steve Hafner ($318,019). Assuming that the performance conditions applicable to the performance-based restricted stock units held by certain executive officers will not be satisfied prior to the closing of the Trulia merger, the estimated value of the equity acceleration that Trulia’s executive officers and non-employee directors may receive in connection with the Trulia merger is as follows: Peter Flint ($6,038,475); Prashant Aggarwal ($4,261,656); Scott Darling ($1,076,303); Daniele Farnedi ($1,584,138); Paul Levine ($4,773,673); Ian Morris ($2,013,734) (which would become vested pursuant to the terms of Mr. Morris’ consulting agreement with Trulia, assuming that he is terminated without cause and regardless of whether the performance conditions are satisfied); Robert Moles ($161,280); Theresia Gouw ($161,280); Sami Inkinen ($161,280); Erik Bardman ($322,622); Gregory Waldorf ($322,622); and Steve Hafner ($318,019).

In addition, for retention purposes, Scott Darling is eligible to receive a cash payment equal to $225,000, which will cliff vest and become payable on the earlier of (1) the closing of the Trulia merger and (2) January 28, 2016, subject to his continued employment through such date.

Effective as of immediately after the Zillow merger, the Holdco board will include all of the individuals who are directors of Zillow immediately prior to the Zillow merger and two individuals who are then directors of Trulia. The merger agreement provides that the two Trulia board designees will be mutually agreed to by Trulia and Zillow before completion of the mergers (the “Trulia board designees”). As of the date of this joint proxy statement/prospectus, Trulia and Zillow have determined that one of the Trulia board designees will be Peter Flint, and no determination has been made as to the identity of the other Trulia board designee. The Trulia board designees are expected to be finally determined by Trulia and Zillow no later than 30 days prior to the completion of the mergers.

Under the merger agreement, upon completion of the mergers, the executive officers of Zillow at the effective time of the Zillow merger will be the executive officers of the Zillow surviving corporation and the executive officers of Trulia at the effective time of the Trulia merger will be the executive officers of the Trulia surviving corporation. It is currently expected that the executive officers of Zillow and Trulia will continue their

 

 

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employment with the Zillow surviving corporation or Trulia surviving corporation, as applicable, following the effective time of the Zillow merger or effective time of the Trulia merger, as applicable, on substantially similar terms and conditions as in existence immediately prior to the effective time of the Zillow merger or the Trulia merger, as applicable.

The members of the Zillow board and the Trulia board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the mergers and in recommending to Zillow shareholders and Trulia stockholders that the merger agreement be approved or adopted, as applicable. See “The Mergers — Interests of Officers and Directors in the Mergers” for more information about these interests, and “The Mergers — Interests of Officers and Directors in the Mergers — Quantification of Equity Acceleration” for the quantification of the benefits that Trulia executive officers and directors may or will receive as a result of any equity acceleration that may be triggered in connection with the Trulia merger.

Regulatory Approvals (page 144)

Each party has agreed to use reasonable best efforts to file, promptly after the date of the merger agreement, its respective filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and make any other required submissions under the HSR Act with respect to the mergers and the other transactions contemplated by the merger agreement. Subject to the terms and conditions of the merger agreement, Zillow and Trulia have agreed to use their reasonable best efforts to take, or cause to be taken, all actions necessary under applicable laws to consummate the mergers including defending through litigation on the merits any claim asserted in court by any party in order to avoid entry of, or to have vacated or terminated, any decree, order or judgment that would prevent the consummation of the mergers as promptly as practicable and in any event by January 28, 2016 (the “outside date”). Zillow and Trulia each filed the required HSR notification and report forms on August 4, 2014, commencing the initial 30-calendar-day waiting period. On September 3, 2014, Zillow and Trulia each received a request for additional information and documentary material, which we refer to as a second request, from the Federal Trade Commission (the “FTC”) in connection with the FTC’s review of the mergers under the HSR Act. Issuance of the second request extends the waiting period under the HSR Act until 30 days after both Zillow and Trulia have substantially complied with the second request, unless the waiting period is voluntarily extended by the parties or terminated sooner by the FTC.

On September 24, 2014, Zillow entered into an agreement, which we refer to as the “timing agreement”, with the FTC not to consummate the mergers prior to 60 days after both Zillow and Trulia have substantially complied with the second requests. Zillow and Trulia have each substantially complied with the second requests; however, on November 10, 2014, Zillow entered into an amendment to the timing agreement, which we refer to as the “amended timing agreement”, with the FTC not to consummate the mergers prior to 11:59 p.m. Eastern time on February 1, 2015. Neither the timing agreement nor the amended timing agreement prevents the parties from consummating the mergers sooner if the FTC grants early termination, closes its investigation or accepts for public comment a proposed consent agreement settling the matter.

Under Section 7A(g)(2) of the Clayton Act, if the FTC identifies deficiencies and makes an application to a United States district court, the court may determine that Zillow (or Trulia) has failed to substantially comply with the second request. If the court makes such a determination, then the court may order compliance with the second request and extend the statutory waiting period until there has been compliance with the second request. See “The Mergers — Regulatory Approvals” for more information about each party’s obligations related to governmental and regulatory approvals.

Voting Agreements (page 175)

In connection with entering into the merger agreement, Zillow and certain directors of Trulia (the “Trulia supporting stockholders”), in their individual capacities, entered into voting agreements (the “Trulia voting

 

 

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agreements”) pursuant to which the Trulia supporting stockholders agreed to, among other things, vote their shares of Trulia common stock (1) in favor of the merger agreement and in favor of approval of the mergers and any other transactions contemplated by the merger agreement and (2) against any proposal made in opposition to, in competition with, or inconsistent with, the merger agreement or the mergers or any other transactions contemplated by the merger agreement. In addition, subject to specified exceptions, the Trulia supporting stockholders agreed not to transfer their respective shares of Trulia common stock during the term of the Trulia voting agreements. The Trulia voting agreements may not be terminated by the Trulia supporting stockholders even if the Trulia board has withdrawn or changed its recommendation in favor of the transaction with Zillow and, in such instances, the Trulia supporting stockholders would be required to vote to approve the merger agreement and any transactions contemplated by the merger agreement. The Trulia voting agreements terminate upon the earlier of (a) the termination of the merger agreement for any reason or (b) the completion of the mergers. As of the Trulia record date, the Trulia supporting stockholders as a group owned and were entitled to vote 1,798,391 shares of Trulia common stock, or approximately 5% of the shares of Trulia common stock outstanding on that date.

In connection with entering into the merger agreement, Richard Barton and Lloyd Frink (the “Zillow supporting shareholders”), in their individual capacities, entered into the Zillow voting agreement pursuant to which they agreed to, among other things, vote their shares of Zillow common stock (1) in favor of the merger agreement and in favor of approval of the mergers and any other transactions contemplated by the merger agreement and (2) against any proposal made in opposition to, in competition with, or inconsistent with, the merger agreement or the mergers or any other transactions contemplated by the merger agreement. The Zillow voting agreement may not be terminated by the Zillow supporting shareholders even if the Zillow board has withdrawn or changed its recommendation in favor of the transaction with Trulia and, in such instances, the Zillow supporting shareholders would be required to vote to approve the merger agreement and any other transactions contemplated by the merger agreement. The Zillow voting agreement terminates upon the earliest of (a) the termination of the merger agreement, (b) the completion of the mergers and (c) July 27, 2015. As of the Zillow record date, the Zillow supporting shareholders together owned and were entitled to vote 38,401 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock, or approximately 64% of the voting power of Zillow common stock outstanding on that date. Trulia is not a party to the Zillow voting agreement.

No Solicitation (page 165)

Subject to specified exceptions, each of Zillow and Trulia has agreed not to (1) solicit, initiate, or knowingly encourage, induce or facilitate any “competing transaction proposal” (as defined in the section entitled “The Merger Agreement — Covenants of the Parties — No Solicitation”) or any inquiry or proposal that may reasonably be expected to lead to a competing transaction proposal, (2) participate in any discussions or negotiations with any person regarding, or furnish any information with respect to, or cooperate in any way with any person with respect to, a competing transaction proposal or any inquiry or proposal that may reasonably be expected to lead to a competing transaction proposal, (3) engage in discussions or negotiations with any person relating to any competing transaction proposal or any inquiry or proposal that may reasonably be expected to lead to a competing transaction proposal, or (4) adopt, or propose publicly to adopt, or enter into any letter of intent or similar document or any contract (other than a confidentiality agreement) relating to any competing transaction proposal. Notwithstanding these restrictions, prior to receipt of the Zillow shareholder approval for Zillow or the Trulia stockholder approval for Trulia, a party may furnish nonpublic information regarding it and its subsidiaries to, or enter into discussions and negotiations with, any person in response to a bona fide written competing transaction proposal that the party’s board of directors concludes in good faith, after consulting with its outside legal counsel and financial advisors, is reasonably expected to result in a “superior proposal” (as defined in the section entitled “The Merger Agreement — Covenants of the Parties — No Solicitation”), if, among other things, the competing transaction proposal did not result from any breach of the restrictions described above.

 

 

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Restrictions on Recommendation Withdrawal (page 166)

The merger agreement generally restricts the ability of the board of directors of each of Zillow and Trulia to withdraw its recommendation that its shareholders or stockholders, as applicable, approve or adopt the merger agreement, as applicable. However, each of the Zillow board and the Trulia board may change its recommendation in response to (1) a “superior proposal” (as defined in the section entitled “The Merger Agreement — Covenants of the Parties — No Solicitation”), or (2) an unknown material event, circumstance, change, effect, development or condition in circumstances not involving or relating to a competing transaction proposal, in each case, if, among other things, such board of directors concludes that a failure to change its recommendation would be inconsistent with its fiduciary duties to its shareholders or stockholders, as applicable, under applicable laws and, if requested by the other party, its representatives have negotiated in good faith with the other party for five days regarding any modifications to the merger agreement so that the transaction contemplated thereby may be effected.

Conditions to Completion of the Mergers (page 169)

Mutual Conditions

The respective obligations of Trulia, Zillow and Holdco to consummate the mergers are subject to the satisfaction or waiver of certain conditions, including:

 

    the effectiveness of the registration statement with respect to the Holdco common stock to be issued in the mergers and the absence of any stop order or proceedings initiated by the SEC for that purpose;

 

    the merger agreement having been approved by the Zillow shareholders and adopted by the Trulia stockholders;

 

    no governmental authority having enacted, issued, promulgated, enforced or entered any law, rule or regulation, judgment, decree, executive order or award that is in effect and has the effect of making the mergers illegal or otherwise preventing the consummation of the mergers;

 

    the expiration or early termination of all applicable waiting periods under the HSR Act; and

 

    the approval of the listing of the Holdco Class A common stock to be issued in the mergers on NASDAQ, subject to official notice of issuance.

Conditions to the Obligations of Zillow and Holdco

The merger agreement provides that the obligations of Zillow and Holdco to complete the mergers are subject to the satisfaction or waiver of certain conditions, including:

 

    the representations and warranties made by Trulia are correct, subject to various materiality or “material adverse effect” qualifications described in the merger agreement;

 

    Trulia’s performance of or compliance with, in all material respects, all agreements or covenants set forth in the merger agreement that are required to be performed or complied with by Trulia on or prior to the closing date;

 

    an executive officer of Trulia having delivered to Zillow a certificate confirming that specified conditions have been satisfied;

 

    no material adverse effect with respect to Trulia having occurred since the date of the merger agreement that is continuing; and

 

    there being no pending legal proceeding brought by a governmental authority (1) seeking to restrain or prohibit the completion of any of the transactions contemplated by the merger agreement or the voting agreements, (2) seeking to impose restrictions on Zillow’s or Trulia’s businesses (e.g., divestitures or “hold separate” arrangements), or (3) that, if adversely determined, would reasonably be likely to have a material adverse effect on Trulia or Zillow.

 

 

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Conditions to the Obligations of Trulia

The merger agreement provides that the obligations of Trulia to complete the mergers are subject to the satisfaction or waiver of certain conditions, including:

 

    the representations and warranties made by Zillow are correct, subject to various materiality or “material adverse effect” qualifications described in the merger agreement;

 

    Zillow’s and Holdco’s respective performance of or compliance with, in all material respects, all of its agreements and covenants set forth in the merger agreement that are required to be performed or complied with by it on or prior to the closing date;

 

    an executive officer of Zillow having delivered to Trulia a certificate confirming that specified conditions have been satisfied; and

 

    no material adverse effect with respect to Zillow having occurred since the date of the merger agreement that is continuing.

Closing (page 155)

The completion of the mergers (the “closing”) will occur on a date to be designated jointly by Zillow and Trulia, which will be as promptly as practicable (and, in any event, no later than two business days) after the satisfaction or, to the extent permitted under the merger agreement, waiver, of the last of all conditions to the mergers to be satisfied or waived, other than conditions that by their nature are to be satisfied at the closing and will in fact be satisfied or waived at the closing, unless another time or date is agreed to in writing by Zillow and Trulia.

Termination of the Merger Agreement (page 171)

The merger agreement may be terminated prior to the effective time of the Zillow merger, notwithstanding the adoption of the merger agreement by Trulia stockholders, under specified circumstances. See “The Merger Agreement — Termination” for more information about the circumstances in which either Zillow or Trulia could terminate the merger agreement.

Termination Fees; Expenses (page 172)

All fees and expenses incurred by the parties are to be paid by the party that has incurred the fees and expenses, except that (1) the parties have agreed to each pay one-half of all expenses relating to printing and mailing of this joint proxy statement/prospectus and the filing fee for the notification and report forms filed under the HSR Act, and (2) Zillow has agreed to pay all expenses relating to the filing fee incurred in connection with the Registration Statement on Form S-4.

The merger agreement provides that Zillow or Trulia, as applicable, will pay the other a cash termination fee in specified circumstances. For more information about the circumstances in which one or both of Zillow or Trulia must pay a termination fee and the amount of the potential fees, see “The Merger Agreement — Termination Fees; Expenses.”

Material U.S. Federal Income Tax Consequences (page 145)

Shearman & Sterling and Goodwin Procter are each of the opinion that each of the mergers will qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of section 368(a) of the Code. Shearman & Sterling and Goodwin Procter are also each of the opinion that the mergers will constitute exchanges to which section 351 of the Code applies. Assuming that each of the mergers qualifies as a reorganization for U.S. federal income tax purposes, a U.S. holder of shares of either Zillow common stock or

 

 

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Trulia common stock generally will not recognize any gain or loss upon the exchange of its shares of Zillow common stock or Trulia common stock for shares of Holdco common stock and, to the extent that such U.S. holder receives cash in lieu of fractional shares of Holdco common stock, it will generally recognize capital gain or loss measured by the difference between the amount of cash received for a fractional share of Holdco common stock and its tax basis in the fractional share of Holdco common stock. Zillow shareholders and Trulia stockholders should consult their tax advisors for a full understanding of all of the tax consequences of the mergers. See “The Mergers — Material U.S. Federal Income Tax Consequences.”

Appraisal/Dissenters’ Rights (page 148)

Under Washington corporate law, holders of Zillow common stock are entitled to exercise dissenters’ rights in connection with the Zillow merger. Under Delaware corporate law, holders of Trulia common stock are not entitled to appraisal rights in connection with the Trulia merger. See “The Mergers — Appraisal/Dissenters’ Rights.”

Listing of Holdco Class A Common Stock (page 152)

Holdco Class A common stock received by Zillow shareholders in the Zillow merger and Trulia stockholders in the Trulia merger is expected to be listed on NASDAQ. After completion of the mergers, shares of Zillow Class A common stock will no longer be quoted on NASDAQ and shares of Trulia common stock will no longer be quoted on the NYSE, and the Zillow Class A common stock and the Trulia common stock will no longer be registered under the Exchange Act. The Holdco Class B common stock issuable to holders of outstanding shares of Zillow Class B common stock will not be listed or quoted for trading on any public trading market.

Comparison of Shareholder Rights (page 197)

The rights of Zillow shareholders are governed by the WBCA, Zillow’s amended and restated articles of incorporation, and Zillow’s amended and restated bylaws. The rights of Trulia stockholders are governed by the DGCL, Trulia’s amended and restated certificate of incorporation, and Trulia’s amended and restated bylaws. Because Zillow shareholders and Trulia stockholders will receive shares of Holdco common stock in the mergers, the rights of both Zillow shareholders and Trulia stockholders will be governed by the WBCA, Holdco’s amended and restated articles of incorporation and Holdco’s amended and restated bylaws upon completion of the mergers. Holdco’s amended and restated articles of incorporation and amended and restated bylaws are substantially similar to the organizational documents of Zillow, except that they provide for a new class of nonvoting capital stock designated as Class C capital stock. Copies of Holdco’s amended and restated articles of incorporation and amended and restated bylaws are attached as Annex F and Annex G, respectively, to this joint proxy statement/prospectus. For a description of how the rights of a Holdco shareholder will be different than the rights of either a Zillow shareholder or a Trulia stockholder, see “Comparison of Shareholder Rights.”

Authorization of Nonvoting Class C capital Stock in Holdco’s Amended and Restated Articles of Incorporation (page 179)

Zillow shareholders and Trulia stockholders are being asked to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation. The authorization of the Holdco Class C capital stock in Holdco’s amended and restated articles of incorporation provides Holdco with the flexibility to issue Holdco Class C capital stock in the future without diluting the relative voting interests of holders of Holdco Class A common stock and Holdco Class B common stock. Although Holdco presently has no specific plans, arrangements, or understanding for the issuance of Holdco Class C capital stock following the mergers, the Holdco Class C capital stock could, for example, be used in the future to raise equity capital, make strategic acquisitions for stock, and contribute to existing and future employee benefit and equity incentive plans used to attract, retain and motivate employees of Holdco, Zillow and Trulia. The Holdco Class C capital stock

 

 

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could also be used in connection with stock dividends or stock splits, convertible debt offerings, and other uses as are permissible under Holdco’s charter documents and governing law.

The Zillow board and the Trulia board believe that providing the Holdco board with the flexibility to issue nonvoting Holdco Class C capital stock in the future for any of the purposes described above and other corporate purposes would facilitate continued growth while enabling Holdco to be managed based on long-term objectives. This is a guiding principle upon which Zillow has been managed since its inception. The Zillow board and the Trulia board believe that authorization of the Holdco Class C capital stock provides the Holdco board with additional flexibility to continue to pursue long-term objectives and is therefore in the best interests of Zillow shareholders and Trulia stockholders, respectively, and Holdco shareholders following the mergers.

As discussed in “Proposal No. 2: Approval of Authorization of Nonvoting Class C Capital Stock in Holdco’s Amended and Restated Articles of Incorporation by Zillow Shareholders and Trulia Stockholders— Interests of Certain Persons”, upon closing of the mergers, Mr. Barton’s holdings and Mr. Frink’s holdings would represent approximately 33% and 22%, respectively, of the voting power of Holdco’s capital stock based on the outstanding shares of Zillow and Trulia as of October 9, 2014 and assuming no Zillow or Trulia stock options, restricted stock units, stock appreciation rights, or convertible notes are exercised, settled, or converted, as applicable, between October 9, 2014 and the effective times of the mergers. As a result, as of the closing of the mergers, Zillow’s founders will have the ability to elect all of Holdco’s directors and to determine the outcome of most matters submitted for a vote of Holdco shareholders. If the Holdco board elects to issue Holdco Class C capital stock in the future, any such issuances would not dilute the voting power of the holders of Holdco’s Class A common stock or Class B common stock, which could have the effect of prolonging the duration of the Zillow founders’ voting control of Holdco.

Litigation Relating to the Mergers (page 152)

Between August 7, 2014 and August 20, 2014, four plaintiffs filed purported class action lawsuits against Trulia and its directors, Zillow and Holdco in connection with the Trulia merger. Three of those purported class actions were brought in the Delaware Court of Chancery, captioned Shue et al. v. Trulia, Inc., et al., Case No. 10020 (August 7, 2014), Sciabacucci et al. v. Trulia, Inc., et al., Case No. 10022 (August 8, 2014), and Steinberg et al. v. Trulia, Inc. et al., Case No. 10049 (August 20, 2014). The fourth of those purported class actions was brought in the Superior Court of the State of California for the County of San Francisco, captioned Collier et al. v. Trulia, Inc., et al., Case No. CGC 14-540985 (August 7, 2014). On September 23, 2014, plaintiff in the Sciabacucci action filed an amended complaint, alleging substantially the same claims and seeking substantially the same relief as in the original complaint. On October 7, 2014, plaintiff in the Collier action filed a new complaint in Delaware Court of Chancery, captioned Collier et al. v. Trulia, Inc., et al., Case No. 10209 (October 7, 2014), alleging substantially the same claims and seeking substantially the same relief as the original complaint filed in California. On October 8, 2014, plaintiff in the Collier action filed a request for dismissal of the California case without prejudice, which the Court granted on November 4, 2014.

Each of the lawsuits alleges that Trulia’s directors breached their fiduciary duties to Trulia stockholders, and that the other defendants aided and abetted such breaches, by seeking to sell Trulia through an allegedly unfair process and for an unfair price and on unfair terms. The Collier complaint filed in Delaware and the amended Sciabacucci complaint also allege that Trulia’s directors breached their fiduciary duties to Trulia stockholders, and that the other defendants aided and abetted such breaches, with respect to the contents of the Form S-4 Registration Statement. All lawsuits seek, among other things, equitable relief that would enjoin the consummation of the Trulia merger and attorneys’ fees and costs. The Delaware actions also seek rescission of the merger agreement (to the extent it has already been implemented) or rescissory damages, and orders directing the individual defendants to account for alleged damages suffered by the plaintiff and the purported class as a result of the defendants’ alleged wrongdoing. The defendants believe that the foregoing lawsuits are entirely without merit and intend to defend against the actions vigorously.

 

 

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On September 24, 2014, plaintiff in the Sciabacucci action filed (1) a motion for expedited proceedings, (2) a motion for a preliminary injunction, (3) a request for production of documents from defendants, and (4) notice of depositions. On October 13, 2014, the Delaware Court of Chancery issued an order consolidating all of the Delaware actions into one matter captioned In re Trulia, Inc. Stockholder Litigation, C.A. No. 10020-CB and appointed Rigrodsky & Long as lead counsel. On October 13 and 14, 2014, the above-referenced motions were refiled under the consolidated case number. On November 14, 2014, plaintiff filed his memorandum of points and authorities in support of his preliminary injunction motion. The hearing on the preliminary injunction motion is set for December 3, 2014.

 

 

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ZILLOW SELECTED HISTORICAL FINANCIAL DATA AND OTHER DATA

The following tables present Zillow’s selected historical financial data as of and for the dates and periods indicated. The statement of operations data for the years ended December 31, 2011, 2012 and 2013 and the balance sheet data as of December 31, 2012 and 2013 have been derived from the audited financial statements of Zillow contained in its Annual Report on Form 10-K for the year ended December 31, 2013, which is incorporated into this joint proxy statement/prospectus by reference. The statement of operations data for the years ended December 31, 2009 and 2010 and the balance sheet data as of December 31, 2009, 2010 and 2011 have been derived from Zillow’s audited financial statements for such years, which have not been incorporated into this joint proxy statement/prospectus by reference. The unaudited condensed consolidated statement of operations data for the nine months ended September 30, 2013 and 2014 and the unaudited condensed consolidated balance sheet data as of September 30, 2014 have been derived from the unaudited condensed consolidated financial statements of Zillow contained in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, which is incorporated into this joint proxy statement/prospectus by reference.

The following information is only a summary and is not necessarily indicative of the results of future operations of Zillow or Holdco. You should read this selected historical financial data together with Zillow’s financial statements that are incorporated by reference into this joint proxy statement/prospectus and their accompanying notes and management’s discussion and analysis of financial condition and results of operations contained therein.

 

    Year Ended December 31,     Nine Months Ended
September 30,
 
    2009     2010     2011     2012     2013     2013     2014  
                                  (unaudited)  
    (in thousands, except per share data)  

Statement of Operations Data:

             

Revenue

  $ 17,491      $ 30,467      $ 66,053      $ 116,850      $ 197,545      $ 139,197      $ 233,564   

Costs and expenses:

             

Cost of revenue (exclusive of amortization) (1)(2)

    4,042        4,973        10,575        14,043        18,810        13,540        20,636   

Sales and marketing (1)

    9,654        14,996        25,725        49,105        108,891        83,913        129,907   

Technology and development (1)

    11,260        10,651        14,143        26,614        48,498        33,849        58,150   

General and administrative (1)(3)

    5,501        6,684        14,268        20,024        37,919        27,367        44,968   

Acquisition-related costs

    —          —          345        1,267        376        201        13,384   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    30,457        37,304        65,056        111,053        214,494        158,870        267,045   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

    (12,966     (6,837     997        5,797        (16,949     (19,673     (33,481

Other income

    111        63        105        142        385        240        768   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

    (12,855     (6,774     1,102        5,939        (16,564     (19,433     (32,713

Income tax benefit

    —          —          —          —          4,111        4,265        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ (12,855   $ (6,774   $ 1,102      $ 5,939      $ (12,453   $ (15,168   $ (32,713
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common shareholders

  $ (12,855   $ (6,774   $ —        $ 5,939      $ (12,453   $ (15,168   $ (32,713

Net income (loss) per share attributable to common shareholders — basic

  $ (1.02   $ (0.53   $ —        $ 0.20      $ (0.35   $ (0.43   $ (0.82

Net income (loss) per share attributable to common shareholders — diluted

  $ (1.02   $ (0.53   $ —        $ 0.18      $ (0.35   $ (0.43   $ (0.82

Weighted-average shares outstanding — basic

    12,613        12,770        19,815        30,194        36,029        35,011        39,810   

Weighted-average shares outstanding — diluted

    12,613        12,770        22,305        32,709        36,029        35,011        39,810   

Other Financial Data:

             

Adjusted EBITDA (unaudited) (4)

  $ (4,908   $ 140      $ 12,214      $ 26,448      $ 30,117      $ 14,720      $ 29,788   

 

 

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    Year Ended December 31,     Nine Months Ended
September 30,
 
    2009     2010     2011     2012     2013     2013     2014  
                                  (unaudited)  
    (in thousands)  

(1)    Includes share-based compensation as follows:

             

Cost of revenue

  $ 183      $ 210      $ 189      $ 380      $ 737      $ 524      $ 1,280   

Sales and marketing

    408        445        388        2,433        10,969        9,875        4,886   

Technology and development

    394        389        546        1,886        4,660        3,053        7,829   

General and administrative

    666        671        822        1,912        7,070        4,929        10,181   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,651      $ 1,715      $ 1,945      $ 6,611      $ 23,436      $ 18,381      $ 24,176   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(2)    Amortization of website development costs and intangible assets included in technology and development

  $ 4,797      $ 4,184      $ 5,384      $ 11,179      $ 19,791      $ 13,792      $ 21,113   

(3)    General and administrative includes a facility exit charge as follows

  $ —        $ —        $ 1,737      $ —        $ —        $ —        $ —     

 

(4) See “Adjusted EBITDA” below for more information and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles, or GAAP

 

    At December 31,     At September 30,  
    2009     2010     2011     2012     2013     2014  
                                  (unaudited)  
    (in thousands)  

Condensed Balance Sheet Data:

           

Cash and cash equivalents and investments

  $ 16,091      $ 13,777      $ 92,136      $ 203,483      $ 437,726      $ 458,450   

Property and equipment, net

    4,409        4,929        7,227        16,948        27,408        38,335   

Working capital

    16,432        11,941        71,713        184,661        282,903        343,574   

Total assets

    24,608        24,013        116,668        307,549        608,063        649,210   

Convertible preferred stock

    4        4        —          —          —          —     

Total shareholders’ equity

    21,126        17,448        101,213        280,317        567,796        585,200   

Adjusted EBITDA

To provide investors with additional information regarding Zillow’s financial results, Zillow has included Adjusted EBITDA within this joint proxy statement/prospectus, a financial measure that is not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). Zillow has provided a reconciliation below of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure.

Adjusted EBITDA is included in this joint proxy statement/prospectus because it is a key metric used by Zillow’s management and board of directors to measure operating performance and trends and to prepare and approve Zillow’s annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons of Zillow on a period-to-period basis.

Use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of Zillow’s results as reported under GAAP. Some of these limitations are:

 

    Adjusted EBITDA does not reflect Zillow’s cash expenditures or future requirements for capital expenditures or contractual commitments;

 

    Adjusted EBITDA does not reflect changes in, or cash requirements for, Zillow’s working capital needs;

 

    Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;

 

 

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    Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

 

    Adjusted EBITDA does not reflect the impact of income taxes;

 

    Adjusted EBITDA does not reflect acquisition-related costs;

 

    Adjusted EBITDA does not reflect certain facility exit charges; and

 

    Other companies, including companies in Zillow’s industry, may calculate Adjusted EBITDA differently than Zillow does, limiting its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and Zillow’s other GAAP results.

The following table presents a reconciliation of Adjusted EBITDA to net income (loss) for each of the periods presented:

 

    Year Ended December 31,     Nine Months Ended
September 30,
 
    2009     2010     2011     2012     2013     2013     2014  
                                  (unaudited)  
    (in thousands)  

Reconciliation of Adjusted EBITDA to Net Income (Loss):

             

Net income (loss)

  $ (12,855   $ (6,774   $ 1,102      $ 5,939      $ (12,453   $ (15,168   $ (32,713

Other income

    (111     (63     (105     (142     (385     (240     (768

Depreciation and amortization expense

    6,407        5,262        7,190        12,773        23,254        15,811        25,709   

Share-based compensation expense

    1,651        1,715        1,945        6,611        23,436        18,381        24,176   

Acquisition-related costs

    —          —          345        1,267        376        201        13,384   

Income tax benefit

    —          —          —          —          (4,111     (4,265     —     

Facility exit charge

    —          —          1,737        —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (unaudited)

  $ (4,908   $ 140      $ 12,214      $ 26,448      $ 30,117      $ 14,720      $ 29,788   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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TRULIA SELECTED HISTORICAL FINANCIAL DATA AND OTHER DATA

The following tables present Trulia’s selected historical financial data as of and for the dates and periods indicated. The consolidated statement of operations data for the years ended December 31, 2011, 2012 and 2013 and the balance sheet data as of December 31, 2012 and 2013 have been derived from the audited financial statements of Trulia contained in its Annual Report on Form 10-K/A for the year ended December 31, 2013, which is incorporated into this joint proxy statement/prospectus by reference. The statement of operations data for the years ended December 31, 2009 and 2010 and the balance sheet data as of December 31, 2009, 2010 and 2011 have been derived from Trulia’s audited financial statements for such years, which have not been incorporated into this joint proxy statement/prospectus by reference. The condensed consolidated unaudited statement of operations data for the nine months ended September 30, 2013 and 2014 and the unaudited balance sheet data as of September 30, 2014 have been derived from the unaudited financial statements of Trulia contained in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, which is incorporated into this joint proxy statement/prospectus by reference.

The following information is only a summary and is not necessarily indicative of the results of future operations of Trulia or Holdco. You should read this selected historical financial data together with Trulia’s financial statements that are incorporated by reference into this joint proxy statement/prospectus and their accompanying notes and management’s discussion and analysis of financial condition and results of operations contained therein.

 

    Year Ended December 31,     Nine Months Ended
September 30,
 
    2009     2010     2011     2012     2013     2013     2014  
                                  (unaudited)  
    (in thousands, except per share data)  

Statement of Operations Data:

             

Revenue

  $ 10,338      $ 19,785      $ 38,518      $ 68,085      $ 143,728      $ 93,998      $ 185,719   

Cost and operating expenses: (1)

             

Cost of revenue (exclusive of amortization) (2)

    2,855        3,657        5,795        9,999        23,122        13,694        32,996   

Technology and development

    7,056        8,803        14,650        20,199        34,612        21,484        41,931   

Sales and marketing

    5,532        8,638        17,717        33,747        71,370        45,785        109,516   

General and administrative

    1,912        2,501        6,123        13,659        32,702        20,568        37,162   

Acquisition costs

    —          —          —          —          6,065        6,065        10,832   

Restructuring costs

    —          —          —          —          —          —          4,797   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and operating expenses

    17,355        23,599        44,285        77,604        167,871        107,596        237,234   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (7,017     (3,814     (5,767     (9,519     (24,143     (13,598     (51,515

Interest and other income

    55        15        17        50        121        112        400   

Interest expense

    (21     (39     (389     (1,016     (1,107     (655     (5,529

Change in fair value of warrant liability

    —          —          (16     (369     —          —          —     

Loss on debt extinguishment

    —          —          —          —          (141     —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for income taxes

    (6,983     (3,838     (6,155     (10,854     (25,270     (14,141     (56,644

Income tax (provision) benefit

    —          —          —          (67     7,511        7,529        (363
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common shareholders

  $ (6,983   $ (3,838   $ (6,155   $ (10,921   $ (17,759   $ (6,612   $ (57,007
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common shareholders, basic and diluted (3)

  $ (1.21   $ (0.64   $ (0.92   $ (0.87   $ (0.54   $ (0.21   $ (1.54

Weighted average shares used in computing net loss per share attributable to common shareholders, basic and diluted (3)

    5,752        6,017        6,657        12,539        33,130        31,734        37,112   

Other Financial Information:

             

Adjusted EBITDA (4)

  $ (5,857   $ (2,497   $ (1,787   $ (3,364   $ 17,106      $ 9,423      $ 14,094   

 

 

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     Year Ended December 31,      Nine Months Ended
September 30,
 
     2009      2010      2011      2012      2013      2013      2014  
                                        (unaudited)  
     (in thousands)  

(1)    Stock-based compensation was allocated as follows:

                    

Cost of revenue

   $ 10       $ 8       $ 11       $ 32       $ 718       $ 298       $ 1,749   

Technology and development

     177         176         482         930         6,365         3,028         6,359   

Sales and marketing

     105         97         183         398         5,663         2,348         8,963   

General and administrative

     13         73         808         1,210         10,227         4,994         12,002   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation related to vesting of stock-based awards

   $ 305       $ 354       $ 1,484       $ 2,570       $ 22,973       $ 10,668       $ 29,073   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other compensation paid in stock:

                    

Restructuring cost

     —           —           —           —           —           —           82   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total compensation paid in stock

   $ 305       $ 354       $ 1,484       $ 2,570       $ 22,973       $ 10,668       $ 29,155   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(2)    Amortization of product development costs were included in technology and development as follows:

   $ 179       $ 366       $ 708       $ 1,108       $ 2,660       $ 1,155       $ 6,263   

 

(3) See Note 12 to Trulia’s audited financial statements for an explanation of the method used to calculate basic and diluted net loss per share attributable to common shareholders and the weighted average number of shares used in the computation of the per share amounts.
(4) See “Non-GAAP Financial Measures” for more information and a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP.

 

     At December 31,      At September 30,  
     2009      2010     2011      2012      2013      2014  
                                       (unaudited)  
     (in thousands)  

Condensed Balance Sheet Data:

                

Cash and cash equivalents and short-term investments

   $ 7,587       $ 4,395      $ 11,341       $ 100,017       $ 225,597       $ 212,114   

Working capital (deficit)

     6,881         (132     4,165         82,632         213,336         188,999   

Property and equipment, net

     847         3,465        5,548         7,069         22,289         41,391   

Total assets

     11,162         15,710        24,195         118,964         655,409         652,665   

Deferred revenue

     546         1,810        4,827         13,296         10,002         9,932   

Total indebtedness

     517         1,955        9,592         9,759         230,000         230,000   

Preferred stock warrant liability

     —           —          297         —           —           —     

Total shareholders’ equity

     8,262         7,142        3,039         86,534         381,076         363,724   

Non-GAAP Financial Measures

Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. Trulia defines Adjusted EBITDA as net loss adjusted to exclude interest income, interest expense, taxes, depreciation and amortization, change in the fair value of the warrant liability, and stock-based compensation. Below in this joint proxy statement/prospectus, Trulia has provided a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP. Trulia’s Adjusted EBITDA may not be comparable to similarly titled measures of other organizations because other organizations may not calculate Adjusted EBITDA in the same manner as Trulia calculates the measure.

Trulia includes Adjusted EBITDA in this joint proxy statement/prospectus because it is an important measure upon which Trulia’s management assesses Trulia’s operating performance. Trulia uses Adjusted EBITDA as a key performance measure because Trulia believes it facilitates operating performance comparisons from period to period by excluding potential differences primarily caused by variations in capital structures, tax positions, the impact of depreciation and amortization expense on fixed assets, changes related to the fair value

 

 

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remeasurements of the preferred stock warrant, and the impact of stock-based compensation expense. Because Adjusted EBITDA facilitates internal comparisons of Trulia’s historical operating performance on a more consistent basis, Trulia also uses Adjusted EBITDA for business planning purposes, to incentivize and compensate its management personnel, and in evaluating acquisition opportunities. In addition, Trulia believes Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in Trulia’s industry as a measure of financial performance and debt-service capabilities.

Trulia’s use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of results as reported under GAAP. Some of these limitations are:

 

    Adjusted EBITDA does not reflect Trulia’s cash expenditures for capital equipment or other contractual commitments;

 

    Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements;

 

    Adjusted EBITDA does not reflect changes in, or cash requirements for, Trulia’s working capital needs;

 

    Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on Trulia’s indebtedness; and

 

    Other companies, including companies in Trulia’s industry, may calculate Adjusted EBITDA measures differently than Trulia does, which reduces its usefulness as a comparative measure.

In evaluating Adjusted EBITDA, you should be aware that in the future Trulia will incur expenses similar to the adjustments in this presentation. Trulia’s presentation of Adjusted EBITDA should not be construed as an inference that Trulia’s future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating Trulia’s performance, you should consider Adjusted EBITDA alongside other financial performance measures, including Trulia’s net loss and other GAAP results.

The following table presents a reconciliation of Adjusted EBITDA to Trulia’s net loss, the most comparable GAAP measure, for each of the periods indicated:

 

     Year Ended December 31,     Nine Months Ended
September 30,
 
     2009     2010     2011     2012     2013     2013     2014  
                                   (unaudited)  
     (in thousands)  

Net loss attributable to common shareholders

   $ (6,983   $ (3,838   $ (6,155   $ (10,921   $ (17,759   $ (6,612   $ (57,007

Non-GAAP adjustments:

              

Interest and other income

     (55     (15     (17     (50     (121     (112     (400

Interest expense

     21        39        389        1,016        1,107        655        5,529   

Loss on debt extinguishment

     —          —          —          —          141        —          —     

Depreciation and amortization

     855        963        2,496        3,585        12,211        6,288        20,907   

Change in fair value of warrant liability

     —          —          16        369        —          —          —     

Stock-based compensation

     305        354        1,484        2,570        22,973        10,668        29,073   

Income tax provision (benefit)

     —          —          —          67        (7,511     (7,529     363   

Acquisition costs

     —          —          —          —          6,065        6,065        10,832   

Restructuring costs

     —          —          —          —          —          —          4,797   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (5,857   $ (2,497   $ (1,787   $ (3,364   $ 17,106      $ 9,423      $ 14,094   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following selected unaudited pro forma condensed combined financial data were prepared using the acquisition method of accounting with Zillow as the accounting acquirer of Trulia. The selected unaudited pro forma condensed combined balance sheet data assume the mergers were completed on September 30, 2014. The selected unaudited pro forma condensed combined statement of operations data assume the mergers were completed on January 1, 2013.

The following selected unaudited pro forma condensed combined financial information is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations of future periods or the results that actually would have been realized had the mergers occurred on the dates indicated. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled “Risk Factors.” The following selected unaudited pro forma condensed combined financial information should be read in conjunction with the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements Zillow, Inc. and Trulia, Inc.” and related notes included in this joint proxy statement/prospectus.

 

     Year Ended
December 31, 2013
    Nine Months Ended
September 30, 2014
 
     (in thousands, except per share data)  

Selected Unaudited Pro Forma Condensed Combined Statement of Operations Data:

    

Revenue

   $ 380,237      $ 419,283   

Total costs and expenses

     483,890        496,087   

Loss from operations

     (103,653     (76,804

Loss before income taxes

     (104,333     (80,394

Net loss

     (104,745     (80,757

Net loss per share — basic and diluted

     (2.02     (1.43

 

     At 
September 30, 2014
 
     (in thousands)  

Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data:

  

Cash and cash equivalents

   $ 334,879   

Short-term and long-term investments

     335,685   

Working capital

     464,539   

Total assets

     3,028,287   

Long-term liabilities

     377,595   

Total shareholders’ equity

     2,479,732   

 

 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE INFORMATION

The following tables summarize selected unaudited per share data for Zillow and Trulia on a historical basis and on a pro forma combined basis giving effect to the mergers using the acquisition method of accounting with Zillow as the accounting acquirer of Trulia for the year ended December 31, 2013 and the nine month period ended September 30, 2014. It has been assumed for purposes of the pro forma combined financial information provided below that the mergers were completed on January 1, 2013 for earnings per share purposes and as of the respective end of the period for book value per share purposes.

The unaudited pro forma per share data are presented for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred if the mergers had been consummated at the beginning of the earliest period presented, nor are they necessarily indicative of future operating results or financial position. The pro forma adjustments are estimates based upon information and assumptions available at the time of the filing of this joint proxy statement/prospectus.

The following information should be read in conjunction with the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements Zillow, Inc. and Trulia, Inc.” and related notes included in this joint proxy statement/prospectus.

 

     Year Ended December 31, 2013  
     Historical     Pro Forma
Equivalent (1)
    Pro Forma
Combined (2)
 
     Zillow     Trulia      

Net loss per share — basic and diluted

   $ (0.35   $ (0.54   $ (0.90   $ (2.02

Book value per share of common stock (3)

   $ 14.41      $ 10.42      $ 19.60      $ 44.14   
     Nine Months Ended September 30, 2014  
             Historical             Pro Forma
    Equivalent (1)    
    Pro Forma
    Combined (2)    
 
     Zillow     Trulia      

Net loss per share — basic and diluted

   $ (0.82   $ (1.54   $ (0.63   $ (1.43

Book value per share of common stock (3)

   $ 14.40      $ 9.63      $ 19.18      $ 43.20   

 

(1) The pro forma equivalent amounts are calculated by multiplying the pro forma combined per share amounts by the exchange ratio of 0.444.
(2) The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 and the nine months ended September 30, 2014, as applicable, were prepared by combining Zillow’s historical consolidated statements of operations and Trulia’s historical consolidated statements of operations, adjusted to give effect to pro forma events that are (a) directly attributable to the mergers, (b) factually supportable, and (c) expected to have a continuing impact on the consolidated results of Holdco following the mergers. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 was also adjusted to include the pro forma impact of the recent acquisitions of StreetEasy, Inc. by Zillow and Market Leader, Inc. by Trulia, assuming those acquisitions were completed on January 1, 2013.
(3) Historical book value per share is computed by dividing common shareholders’ equity by the number of shares of Zillow or Trulia common stock outstanding, as applicable. Pro forma combined book value per share is computed by dividing pro forma common shareholders’ equity by the pro forma number of shares of Zillow common stock that would have been outstanding as of December 31, 2013 or September 30, 2014, as applicable.

 

 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

The table below sets forth, for the calendar quarters indicated, the high and low sales prices per share, as well as the dividend paid per share, of Zillow Class A common stock, which trades on NASDAQ under the symbol “Z,” and Trulia common stock, which trades on the NYSE under the symbol “TRLA.” Zillow Class B common stock is not listed or quoted for trading in any public market.

 

     Zillow      Trulia  
     High      Low      Dividend      High      Low      Dividend  

Year Ended December 31, 2012

                 

First Quarter

   $ 36.60       $ 22.17         —         $ —         $ —           —     

Second Quarter

     44.23         30.60         —           —           —           —     

Third Quarter (1)

     46.86         35.57         —           26.57         20.44         —     

Fourth Quarter

     42.82         23.00         —           23.88         14.69         —     

Year Ended December 31, 2013

                 

First Quarter

   $ 57.82       $ 28.00         —         $ 38.22       $ 16.50         —     

Second Quarter

     63.76         48.52         —           35.33         27.52         —     

Third Quarter

     103.00         54.38         —           52.71         30.81         —     

Fourth Quarter

     91.93         70.28         —           51.54         26.35         —     

Year Ended December 31, 2014

                 

First Quarter

   $ 102.20       $ 76.00         —         $ 39.83       $ 28.15         —     

Second Quarter

     145.59         84.64         —           48.68         29.23         —     

Third Quarter

     164.90         112.54         —           67.50         38.38         —     

Fourth Quarter (through November 13, 2014)

     117.10         94.23         —           48.95         40.38         —     

 

(1) Trulia’s common stock commenced trading on the NYSE on September 20, 2012.

The following table sets forth the closing sale prices per share of Zillow Class A common stock and Trulia common stock as of July 25, 2014, the last trading day prior to the public announcement of the mergers, and as of November 13, 2014, the most recent practicable trading day prior to the date of this joint proxy statement/prospectus. The table also sets forth the implied value of the Trulia merger consideration for each share of Trulia common stock as of the same two dates. This implied value was calculated by multiplying the closing sale price of Zillow common stock on the relevant date by the Trulia exchange ratio of 0.444.

 

     Zillow Class A
Common Stock
     Trulia
Common Stock
     Implied Market
Value of Trulia
Common Stock
 

July 25, 2014

   $ 158.86       $ 56.35       $ 70.53   

November 13, 2014

   $ 102.46       $ 43.39       $ 45.49   

Although the Trulia exchange ratio of 0.444 is fixed, the value of a share of Zillow Class A common stock will fluctuate until the mergers are consummated. As a result, the implied value of the Trulia merger consideration that Trulia stockholders will receive upon completion of the mergers will depend on the market price of Zillow Class A common stock at the effective times of the mergers.

Dividend Policy

Zillow has never declared or paid a cash dividend on its common stock and intends to retain all available funds and any future earnings to fund the development and growth of its business. Zillow does not anticipate paying any cash dividends on its Class A common stock or Class B common stock in the foreseeable future. Any

 

 

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future determinations to pay dividends on Zillow’s Class A common stock or Class B common stock would depend on the results of operations, financial condition and liquidity requirements, restrictions that may be imposed by applicable law or contracts, and any other factors that the Zillow board may consider relevant.

Trulia has never declared or paid a cash dividend on its common stock and intends to retain all future earnings for the operation and expansion of its business. Trulia does not anticipate declaring or paying any cash dividends on its common stock in the foreseeable future. Any payment of cash dividends on Trulia’s common stock will be at the discretion of the Trulia board and will depend upon Trulia’s operating results, earnings, capital requirements, contractual restrictions and other factors deemed relevant by the Trulia board. In addition, Trulia’s current credit facility prohibits Trulia from paying any cash dividends without the lenders’ consent.

Holdco has not yet determined its dividend policy. Any future determinations to pay dividends on Holdco’s common stock would depend upon Holdco’s results of operations, financial condition and liquidity requirements, restrictions that may be imposed by applicable law or contracts, and other factors that the Holdco board may consider relevant.

 

 

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RISK FACTORS

In addition to the other information included in, or incorporated by reference in, and found in the annexes attached to, this joint proxy statement/prospectus, including the matters addressed in “Cautionary Note Concerning Forward-Looking Statements,” you should carefully consider the risks described below before deciding how to vote. You should also read and consider the risk factors associated with each of the businesses of Zillow and Trulia because these risk factors may affect the operations and financial results of the combined company, Holdco. These risk factors may be found under Part II, Item 1A in Zillow’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and in Trulia’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, each of which is on file with the SEC and both of which are incorporated by reference into this joint proxy statement/prospectus. Furthermore, you should read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference herein. See “Where You Can Find More Information” for the location of information incorporated by reference into this joint proxy statement/prospectus.

Risk Factors Relating to the Mergers

The Market Value of the Shares of Holdco Common Stock to Be Issued to Zillow Shareholders and Trulia Stockholders Is Uncertain and May Be Lower Than the Market Value of the Shares of Zillow Common Stock and/or Trulia Common Stock to Be Surrendered in the Mergers by the Zillow Shareholders and Trulia Stockholders, Respectively.

Zillow shareholders and Trulia stockholders will receive a fixed number of shares of Holdco common stock in the mergers rather than a number of shares with a particular fixed market value. The market values of Zillow common stock and Trulia common stock at the time of the mergers may vary significantly from their prices on the date the merger agreement was executed, the date of this joint proxy statement/prospectus, or the date(s) on which Zillow shareholders and Trulia stockholders vote on the mergers. Because the respective merger consideration exchange ratios will not be adjusted to reflect any changes in the market prices of Zillow Class A common stock or Trulia common stock, the market value of the Holdco Class A common stock issued in the mergers and the Zillow Class A common stock and Trulia common stock surrendered in the mergers may be higher or lower than the values attributed to these shares on earlier dates. You are urged to obtain up-to-date prices for Zillow common stock and Trulia common stock. See “Comparative Per Share Market Price and Dividend Information” for ranges of historic market prices of Zillow Class A common stock and Trulia common stock.

Changes in the market prices of Zillow Class A common stock and Trulia common stock may result from a variety of factors that are beyond the control of Zillow or Trulia, including changes in their respective businesses, operations, and prospects, regulatory considerations, governmental actions, and legal proceedings and developments. Market assessments of the benefits of the mergers, the likelihood that the mergers will be completed, and general and industry-specific market and economic conditions may also have an effect on the market price of Zillow Class A common stock and Trulia common stock. Changes in market prices of Zillow Class A common stock and Trulia common stock may also be caused by fluctuations and developments affecting domestic and global securities markets. Neither Zillow nor Trulia is permitted to terminate the merger agreement solely because of changes in the market price of either party’s respective common stock.

Obtaining Required Regulatory Approvals May Prevent or Delay Completion of the Mergers, Reduce the Anticipated Benefits of the Mergers, or Require Changes to the Structure or Terms of the Mergers.

Completion of the mergers is conditioned upon, among other things, the expiration or termination of the waiting period (and any extensions thereof) applicable to the mergers under the HSR Act. At any time before or after the mergers are consummated, any of the Department of Justice, the Federal Trade Commission, or U.S. state attorneys general could take action under the antitrust laws in opposition to the mergers, including seeking to enjoin completion of the mergers, condition completion of the mergers upon the divestiture of assets of Zillow, Trulia, or their respective subsidiaries, or impose restrictions on Holdco’s post-merger operations. These actions could negatively affect the results of operations and financial condition of Holdco following

 

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completion of the mergers. Any such requirements or restrictions may prevent or delay completion of the mergers or reduce the anticipated benefits of the mergers, which could also have a material adverse effect on Holdco’s business and cash flows, financial condition and results of operations. No assurance can be given that the required regulatory approvals will be obtained or that the required conditions to closing will be satisfied, and, even if all such approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions, or timing of the approvals. See “The Mergers — Regulatory Approvals” for a discussion of the regulatory approvals required in connection with the consummation of the mergers.

Failure to Successfully Integrate the Businesses of Zillow and Trulia in the Expected Time Frame May Adversely Affect Holdco’s Future Results.

Zillow and Trulia entered into the merger agreement with the expectation that the mergers will result in various benefits, including certain cost savings and operational efficiencies or synergies. To realize these anticipated benefits, the businesses of Zillow and Trulia must be successfully integrated. Historically, Zillow and Trulia have been independent companies, and they will continue to be operated as such until the completion of the mergers. The integration may be complex and time consuming and may require substantial resources and effort. The management of Holdco may face significant challenges in consolidating the operations of Zillow and Trulia, integrating the technologies, procedures, and policies, as well as addressing the different corporate cultures of the two companies and retaining key personnel. If the companies are not successfully integrated, the anticipated benefits of the mergers may not be realized fully or at all or may take longer to realize than expected.

Zillow and Trulia Will Be Subject to Business Uncertainties and Contractual Restrictions While the Mergers Are Pending.

Uncertainty about the effect of the mergers on employees, customers, partners, and suppliers may have an adverse effect on Zillow and Trulia and, consequently, on Holdco. These uncertainties may impair the ability of Zillow and Trulia to retain and motivate key personnel and could cause customers, partners, suppliers, and others that deal with Zillow and Trulia to defer entering into contracts with, or making other decisions concerning, either of them or to seek to change existing business relationships with them. Certain of Trulia’s customer contracts contain change of control restrictions that may give rise to a right of termination or cancellation in connection with the mergers. The loss or deterioration of relationships with significant customers, partners, or suppliers could have a material adverse effect on Zillow, Trulia, and Holdco. In addition, the merger agreement restricts Zillow and Trulia from making certain acquisitions and taking other specified actions until the mergers occur without the consent of the other party. These restrictions may prevent Zillow and Trulia from pursuing attractive business opportunities that may arise prior to the completion of the mergers or otherwise adversely affect Zillow’s and Trulia’s abilities to execute on their business strategies. See “The Merger Agreement — Covenants of the Parties” for a description of the restrictive covenants applicable to Zillow and Trulia.

The Merger Agreement Limits Zillow’s and Trulia’s Abilities to Pursue Alternatives to the Mergers and Imposes Other Obligations and Costs on Zillow and Trulia.

Each of Zillow and Trulia has agreed that it will not solicit, initiate, knowingly encourage, induce, or facilitate inquiries or proposals or engage in discussions or negotiations regarding takeover proposals, subject to limited exceptions, including that a party may take certain actions in the event it receives an unsolicited takeover proposal that constitutes a superior proposal or is reasonably expected to lead to a superior proposal, and the party’s board of directors determines in good faith, after consultation with its outside legal counsel and a financial advisor of nationally recognized standing, that a failure to take action with respect to such takeover proposal would be inconsistent with its fiduciary duties. Each party has also agreed that its board of directors will not change its recommendation to its shareholders or stockholders, as applicable, or approve any alternative agreement, subject to limited exceptions. The merger agreement also requires each party to call, give notice of, and hold a meeting of its shareholders or stockholders, as applicable, for the purposes of obtaining the applicable shareholder or stockholder approval. This special meeting requirement does not apply to a party in the event that

 

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the merger agreement is terminated in accordance with its terms. See “The Merger Agreement — Covenants of the Parties.” In addition, if the merger agreement is terminated under specified circumstances, Zillow or Trulia may be required to pay a termination fee of $69.8 million. The merger agreement provides further that Zillow may be required to pay Trulia a termination fee of $150 million if the merger agreement is terminated under other certain circumstances. See “The Merger Agreement — Termination Fees; Expenses” for a description of the circumstances under which such termination fees are payable. In addition, upon adoption of the merger agreement by Trulia stockholders at the Trulia special meeting the right of Trulia to terminate the merger agreement in response to a superior proposal is eliminated. These provisions might discourage a potential competing acquiror with an interest in acquiring all or a significant part of Zillow or Trulia from proposing an acquisition, even if it were prepared to pay consideration with greater value than that proposed in the merger agreement, or might result in a potential competing acquiror proposing to pay less to acquire Zillow or Trulia than it might otherwise have been willing to pay.

Both Zillow Shareholders and Trulia Stockholders Will Have a Reduced Ownership and Voting Interest After the Mergers and Will Exercise Less Influence Over Management.

After the completion of the mergers, the Zillow shareholders and Trulia stockholders will own a smaller percentage of Holdco than they currently own of Zillow and Trulia, respectively. Upon completion of the mergers, it is anticipated that Zillow shareholders, on the one hand, and Trulia stockholders, on the other hand, will hold approximately 67% and 33%, respectively, of the shares of common stock of Holdco on a fully-diluted basis, based on outstanding shares of common stock, stock options, restricted stock units, and stock appreciation rights of Zillow and Trulia, and shares issuable upon conversion of Trulia’s outstanding convertible notes, as of June 30, 2014. Consequently, Zillow shareholders, as a group, and Trulia stockholders, as a group, will each have reduced ownership and voting power in Holdco compared to their ownership and voting power in Zillow and Trulia, respectively. In particular, Trulia stockholders, as a group, will have less than a majority of the ownership and voting power of Holdco. In addition, as discussed below under the risk factor titled “The Structure of Holdco’s Capital Stock as Contained in Its Charter Documents Has the Effect of Concentrating Voting Control With Zillow’s Founders and Limits Your Ability to Influence Corporate Matters,” all of Holdco’s shares of Class B common stock outstanding following the mergers will be held or controlled by Zillow’s founders and will represent more than a majority of the voting power of Holdco’s outstanding voting shares of capital stock. As a result, for the foreseeable future following the mergers, Zillow’s founders will have significant control over Holdco’s management and affairs, and Trulia stockholders, as a group, will be able to exercise significantly less collective influence over the management and policies of Holdco than they currently exercise over the management and policies of Trulia.

Certain Directors and Executive Officers of Zillow and Trulia May Have Interests in the Mergers That Are Different From or in Conflict With Yours.

Executive officers of Zillow and Trulia participated in the negotiation of the terms of the merger agreement and the Zillow and Trulia boards approved the merger agreement and recommend that you vote in favor of the proposal to approve or adopt the merger agreement, as applicable, and the other proposals included in this joint proxy statement/prospectus. These directors and executive officers may have interests in the mergers that are different from or in conflict with yours. The interests of Zillow directors and officers include the following:

 

    Zillow’s directors will serve as directors on the Holdco board;

 

    Zillow’s executive officers will be the executive officers of the Zillow surviving corporation; and

 

    Zillow’s directors and executive officers will be provided continued indemnification and insurance coverage.

The interests of Trulia directors and executive officers include the following:

 

    All unvested Trulia equity awards held by non-employee directors of Trulia will vest immediately prior to the effective time of the Trulia merger;

 

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    Certain unvested Trulia equity awards held by executive officers of Trulia will vest upon a qualifying termination within twelve months following the Trulia merger;

 

    One of Trulia’s executive officers, Scott Darling, is eligible to receive a retention cash payment following the Trulia merger;

 

    Two of Trulia’s directors will serve as directors on the Holdco board;

 

    Trulia’s executive officers will be the executive officers of the Trulia surviving corporation;

 

    Trulia’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement; and

 

    Trulia has entered into an agreement with one of its executive officers, Ian Morris, which provides that Mr. Morris will provide consulting services to Trulia through August 31, 2015. Pursuant to the agreement, Mr. Morris will be entitled to accelerated vesting of certain equity awards if his service as a consultant is terminated without cause prior to August 31, 2015.

You should be aware of these interests when you consider your board’s recommendation that you vote in favor of the mergers. For a discussion of the interests of directors and executive officers in the mergers, see “The Mergers — Interests of Officers and Directors in the Mergers.”

The Shares of Holdco Common Stock to Be Received by Zillow Shareholders and Trulia Stockholders as a Result of the Mergers Will Have Different Rights From Shares of Zillow Common Stock and Trulia Common Stock.

Following completion of the mergers, Zillow shareholders and Trulia stockholders will no longer be holders of Zillow and Trulia but will instead be shareholders of Holdco. There will be important differences between your current rights as a Zillow shareholder or Trulia stockholder and your rights as a Holdco shareholder. See “Comparison of Shareholder Rights” for a discussion of the different rights associated with Zillow common stock and Trulia common stock.

Failure to Complete the Mergers Could Negatively Impact the Stock Prices, Businesses, and Financial Results of Zillow and Trulia.

If the mergers are not completed, the ongoing businesses of Zillow and Trulia may be adversely affected and Zillow and Trulia will be subject to certain risks and consequences, including the following:

 

    if the merger agreement is terminated under specified circumstances, Zillow may be required to pay Trulia a termination fee of $69.8 million or $150 million (depending on the specific circumstances);

 

    if the merger agreement is terminated under other specified circumstances, Trulia may be required to pay Zillow a termination fee of $69.8 million;

 

    Zillow and Trulia will be required to pay various costs relating to the mergers regardless of whether the mergers are completed, such as significant fees and expenses for legal, accounting, financial advisory, and printing services;

 

    matters relating to the mergers may require substantial time and effort from Zillow and Trulia management, which time and effort could have otherwise been devoted to other opportunities that might have been beneficial to Zillow and Trulia, respectively, as independent companies;

 

    Zillow and Trulia may experience negative reactions from the financial markets and from their respective employees, customers, partners, and suppliers if the mergers are not completed; and

 

    Zillow and Trulia may be subject to litigation related to a failure to complete the mergers or to enforce their respective rights under the merger agreement.

If the mergers are not completed, these and other risks could materially affect the businesses, financial results, and stock prices of Zillow and Trulia.

 

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Zillow, Trulia, and, Following the Mergers, Holdco, Must Continue to Retain, Recruit, and Motivate Executives and Other Key Employees, and Failure to Do So Could Negatively Affect Holdco.

For the mergers to be successful, both Zillow and Trulia must continue to retain, recruit, and motivate executives and other key employees during the period before the mergers are completed. Further, Holdco must be successful at retaining, recruiting, and motivating key employees following the completion of the mergers in order for the benefits of the transaction to be fully realized. Experienced employees in the industries in which Zillow and Trulia operate are in high demand, and competition for their talents can be intense. Employees of both Zillow and Trulia may experience uncertainty about their future roles with the combined company until, or even after, strategies with regard to the combined companies are announced and executed. The potential distractions related to the mergers may adversely affect the ability of Zillow, Trulia, and, following completion of the mergers, Holdco, to keep executives and other key employees focused on business strategies and goals and to address other important personnel matters. A failure by Zillow, Trulia, or, following the completion of the mergers, Holdco, to attract, retain, and motivate executives and other key employees during the period prior to or after the completion of the mergers could have a negative impact on their respective businesses.

Zillow, Trulia, and Holdco Will Incur Significant Transaction and Merger-Related Transition Costs in Connection With the Mergers.

Zillow and Trulia expect that they and Holdco will incur significant, non-recurring costs in connection with completing the mergers and integrating the operations of the two companies. Zillow and Trulia may incur additional costs to maintain employee morale and to retain key employees. Zillow and Trulia will also incur significant fees and expenses relating to legal, accounting, and other services associated with the mergers. Some of these costs are payable regardless of whether the mergers are completed. In addition, under specified circumstances, Zillow or Trulia may be required to pay a termination fee of $69.8 million, and Zillow may be required to pay a termination fee of $150 million (depending on the specific circumstances) if the merger agreement is terminated. Additional unanticipated costs may be incurred in the course of integration, and management cannot ensure that the elimination of duplicative costs or the realization of other efficiencies will offset the transaction and integration costs in the near term or at all. See “The Merger Agreement — Termination Fees; Expenses” for additional information.

The Unaudited Pro Forma Condensed Combined Financial Information Included in This Joint Proxy Statement/Prospectus May Not Be Indicative of What Holdco’s Actual Financial Position or Results of Operations Would Have Been.

The unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Holdco’s actual financial position or results of operations would have been had the mergers been completed on the dates indicated. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to Trulia’s net assets. The purchase price allocation reflected in this joint proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Trulia as of the date of the completion of the mergers. In addition, subsequent to the closing date, there may be further refinements of the purchase price allocation as additional information becomes available. Accordingly, the final purchase accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. See “Unaudited Pro Forma Condensed Combined Financial Statements Zillow, Inc. and Trulia, Inc.” for more information.

 

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Several Lawsuits Have Been Filed Against Trulia, Members of the Trulia Board, Zillow, and Holdco Challenging the Mergers, and an Adverse Ruling in Such Lawsuits May Prevent the Mergers From Becoming Effective or From Becoming Effective Within the Expected Time Frame.

Trulia, members of the Trulia board, Zillow, and Holdco are named as defendants in lawsuits brought by and on behalf of Trulia stockholders challenging the mergers, seeking, among other things, to enjoin the defendants from completing the mergers on the agreed-upon terms. See “The Mergers — Litigation Relating to the Mergers” for more information about these lawsuits. Other similar lawsuits challenging the mergers may be filed against Trulia, Zillow, their respective boards, or Holdco, and all such lawsuits could result in substantial costs, including costs associated with the indemnification of directors.

One of the conditions to the closing of the mergers is that no order has been enforced, enacted, or issued by any governmental entity that prohibits, restrains, or makes illegal the consummation of the mergers or other transactions contemplated by the merger agreement. As such, if the plaintiffs are successful in obtaining an injunction prohibiting the defendants from completing the mergers on the agreed-upon terms, then such injunction may prevent the mergers from becoming effective or from becoming effective within the expected time frame.

Risk Factors Relating to Holdco After Completion of the Mergers

Unless the context requires otherwise, references to “Holdco” in this section are to Zebra Holdco, Inc. as directly or indirectly affected by, acting through, or having the attributes of, one or more of Zillow, Trulia, and their respective direct and indirect subsidiaries, in each case, by virtue of Holdco’s direct or indirect ownership thereof following completion of the mergers.

Zillow and Trulia Will Continue to, and Holdco Will, Face Intense Competition to Attract and Retain Users and Advertisers.

The management of each of Zillow and Trulia expects to maintain both the Zillow and Trulia consumer brands following completion of the mergers. Zillow and Trulia will continue to, and Holdco will, operate in a very competitive segment, and competition could impair their abilities to attract and retain users and advertisers. Holdco’s success will require continued innovation in providing products and services that are useful to consumers and real estate, rental, mortgage, and home improvement professionals, and attractive to advertisers. Further, many current advertisers of Zillow and Trulia are party to short-term contracts, and such advertisers could choose to modify or discontinue their relationships with Zillow or Trulia, respectively, with little or no advance notice, including as a result of the announcement of the mergers or because of perceived conflicts arising from the proposed combination of the two companies. Holdco’s failure to differentiate its products and services or to attract and retain users and advertisers could adversely affect Holdco’s profitability and results of operations.

The Loss of Key Employees or the Inability to Recruit and Retain Qualified Employees Could Adversely Affect Holdco’s Profitability and Results of Operations.

Holdco’s success will depend on its ability to attract, retain, and motivate qualified employees, including key management. Operational matters related to the mergers may create challenges as management works to maintain a vibrant corporate culture. The inability to effectively attract, retain, and motivate employees who possess substantial experience or expertise could materially adversely affect Holdco’s ability to successfully manage its growth and fully realize anticipated synergies among the combined companies, thereby materially adversely affecting Holdco’s results of operations and prospects.

 

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Holdco May Be Unable to Increase Awareness of the Zillow and Trulia Brands in a Cost-Effective Manner, Which Could Harm Its Business.

Awareness, perceived quality, and differentiation of the Zillow and Trulia brands will be important to the success of Holdco in attracting users and advertisers. Both Zillow and Trulia have invested heavily in advertising to increase brand awareness, and the results of these investments may be negatively impacted by the mergers, including as a result of confusion or dilution of the Zillow and Trulia brands with the introduction of Holdco as a holding company. If the returns on these investments are less than anticipated, Holdco’s business, results of operations, and financial condition could be harmed.

Holdco May Not Be Able to Maintain or Establish Relationships With Real Estate Brokerages, Real Estate Listing Aggregators, Multiple Listing Services, Property Management Companies, Home Builders, Data Providers, or Other Third-Party Listing Providers, Which Could Impair Its Ability to Attract and Retain Users.

Holdco’s ability to attract users will depend to some degree on its ability to provide robust for-sale and rental listings and other real estate-related data. Real estate brokerages, real estate listing aggregators, multiple listing services, property management companies, home builders, data providers, or other third-party listing providers may defer entering into or renewing contracts, or seek to change existing business relationships, with Zillow, Trulia, or Holdco, as appropriate, including as a result of perceived conflicts or uncertainty arising from the proposed transaction. The loss of these relationships or the negotiation of terms that are less favorable to Holdco could harm its business, results of operations, and financial condition.

Zillow and Trulia Are Involved in Arrangements With Third Parties That May Restrict Zillow’s and Trulia’s, and, Following the Mergers, Holdco’s, Ability to Promote and Develop Certain Products and Fully Utilize Certain Intellectual Property and Other Assets Across the Combined Companies.

Zillow and Trulia are each party to certain co-promotion, development, licensing, and other agreements with third parties, some of which may contain provisions limiting Zillow’s or Trulia’s ability to promote and/or develop certain products. Following the completion of the mergers, products previously offered by either Zillow or Trulia may become subject to these restrictions by virtue of the combination of the two companies under Holdco. If it is determined that any of Holdco’s products are subject to these restrictions, Holdco may be required to divest, license, or otherwise cease offering these products. In the event any product captured by these restrictions as a result of the mergers contributes significantly to sales, the divesture of rights to offer the product could have an adverse effect on Holdco’s business, cash flows, results of operations, financial position, and prospects. Further, such agreements may restrict Holdco’s ability to fully utilize certain third-party intellectual property and other assets if such rights are limited to Zillow or Trulia, as applicable, which may in turn limit Holdco’s ability to realize certain anticipated synergies.

The Market Price for Shares of Holdco Class A Common Stock May Be Affected by Factors Different From Those Affecting the Market Price for Shares of Zillow Class A Common Stock and Trulia Common Stock.

Upon completion of the mergers, holders of Trulia common stock and Zillow common stock will become holders of Holdco common stock. Although, as a combined company, Holdco will generally be subject to the same risks that each of Zillow and Trulia currently face, those risks may affect the results of operations of Holdco differently than they affect the results of operations of each of Zillow and Trulia as separate companies. Additionally, the results of operations of Holdco may be affected by additional or different factors than those that currently affect the results of operations of Zillow and Trulia, including, but not limited to: complexities associated with managing the larger, more complex, combined business; integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services; and potential performance issues resulting from the diversion of management’s attention caused by integrating the companies’ operations. For a discussion of the businesses of Zillow and Trulia and of certain factors to consider in connection with those businesses, see the documents incorporated by reference in this joint proxy statement/prospectus in the section entitled “Where You Can Find More Information.”

 

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The Market Price of Holdco Class A Common Stock May Decline if Holdco Does Not Achieve the Anticipated Benefits of the Mergers.

The market price of Holdco Class A common stock may decline if, among other factors, the integration of Zillow and Trulia is unsuccessful, the operational cost savings estimates are not realized, or the transaction costs related to the mergers are greater than expected. The market price of Holdco Class A common stock also may decline if Holdco does not achieve the perceived benefits of the mergers as rapidly as or to the extent anticipated by financial or industry analysts or if the effect of the mergers on Holdco’s financial results is not consistent with the expectations of financial or industry analysts.

The Future Results of Holdco Will Suffer if Holdco Does Not Effectively Manage Its Expanded Operations Following the Mergers.

Following completion of the mergers, the size of Holdco’s business will increase significantly beyond the current size of either Zillow’s or Trulia’s business. Holdco’s future success depends, in part, upon its ability to manage this growth, which will place substantial demands on management and operational infrastructure. There can be no assurances that Holdco will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements, and other benefits currently anticipated from the mergers.

There Has Been No Prior Public Market for Holdco Class A Common Stock, and an Active Public Market May Not Develop After the Completion of the Mergers.

No public market currently exists for Holdco Class A common stock. Holdco intends to apply to list its Class A common stock on NASDAQ. None of Zillow, Trulia and Holdco can predict the extent to which an active trading market for Holdco Class A common stock will develop or how liquid that market might become.

The Price of Holdco Class A Common Stock May Be Volatile.

The price of Holdco Class A common stock may be volatile and subject to wide fluctuations. In addition, the trading volume of Holdco Class A common stock may fluctuate and cause significant price variations to occur. Holdco cannot assure you that the price of Holdco Class A common stock will not fluctuate or decline significantly in the future. In addition, the stock market in general can experience considerable price and volume fluctuations that may be unrelated to Holdco’s performance.

Holdco Has Not Yet Determined Its Dividend Policy and May Not Pay Dividends.

Holdco has not yet determined its dividend policy. Any determination to pay dividends in the future will be at the discretion of the Holdco board and will depend upon Holdco’s results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law, rule or regulation, business and investment strategy, and other factors that the Holdco board deems relevant. The Holdco board may decide not to pay periodic or other dividends to holders of Holdco common stock. If Holdco does not pay dividends, then the return on an investment in its common stock will depend entirely upon any future appreciation in its stock price. There is no guarantee that Holdco common stock will appreciate in value or maintain its value.

Holdco May Engage in Future Acquisitions That May Dilute Its Shareholders’ Ownership and Cause It to Incur Debt and Assume Contingent Liabilities.

As part of its business strategy, Holdco expects to review potential acquisitions that could complement its product offerings, augment its market coverage, or enhance its technical capabilities. While Holdco has no definitive agreements providing for any acquisitions (other than the mergers contemplated by this joint proxy statement/prospectus), it may acquire businesses, products, or technologies in the future. In the event of future acquisitions, Holdco could issue equity securities that would dilute its then-existing shareholders’ ownership, incur substantial debt or other financial obligations, or assume contingent liabilities. Any of these actions by Holdco could seriously harm its results of operations or the price of its Class A common stock.

 

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The Structure of Holdco’s Capital Stock as Contained in Its Charter Documents Has the Effect of Concentrating Voting Control With Zillow’s Founders and Limits Your Ability to Influence Corporate Matters.

Since Zillow’s inception, its capital structure has included authorized Class A common stock and authorized Class B common stock. Holdco has a similar capital structure. Holdco Class A common stock entitles its holder to one vote per share, and Holdco Class B common stock entitles its holder to ten votes per share. All shares of Zillow Class B common stock have been and are, and all shares of Holdco Class B common stock will be, held or controlled by Zillow’s founders, Richard Barton and Lloyd Frink. As of October 9, 2014, Mr. Barton’s holdings and Mr. Frink’s holdings represented approximately 39% and 25%, respectively, of the voting power of Zillow’s outstanding capital stock (without giving effect to the Zillow voting agreement), and upon closing of the mergers Mr. Barton’s holdings and Mr. Frink’s holdings would represent approximately 33% and 22%, respectively, of the voting power of Holdco’s capital stock based on the outstanding shares of Zillow and Trulia as of October 9, 2014 and assuming no Zillow or Trulia stock options, restricted stock units, stock appreciation rights, or convertible notes are exercised, settled, or converted, as applicable, between October 9, 2014 and the effective times of the mergers.

For the foreseeable future, Mr. Barton and Mr. Frink will therefore have significant control over Holdco’s management and affairs and will be able to control most matters requiring shareholder approval, including the election or removal (with or without cause) of directors and the approval of any significant corporate transaction, such as a merger or other sale of Holdco or its assets. Holdco’s amended and restated articles of incorporation also authorize a class of nonvoting capital stock designated as Class C capital stock. Because the Class C capital stock carries no voting rights (except as required by applicable law or as expressly provided in the Holdco amended and restated articles of incorporation), the issuance of any Class C capital stock in the future could prolong the duration of Mr. Barton’s and Mr. Frink’s relative ownership of Holdco’s voting power. See “Proposal No. 2: Approval of Authorization of Nonvoting Class C Capital Stock in Holdco’s Amended and Restated Articles of Incorporation.” This concentrated control could delay, defer or prevent a change of control, merger, consolidation, takeover, or other business combination involving Holdco that you, as a shareholder, may otherwise support. This concentrated control could also discourage a potential investor from acquiring Holdco Class A common stock (or Holdco Class C capital stock, if any Holdco Class C capital stock is issued and becomes publicly traded) due to the limited voting power of such stock relative to the Holdco Class B common stock and might harm the market price of Holdco Class A common stock (and Holdco Class C capital stock, if it is publicly traded).

Anti-Takeover Provisions in Holdco’s Charter Documents and Under Washington Law Could Make an Acquisition of Holdco More Difficult, Limit Attempts by Shareholders to Replace or Remove Its Management and Affect the Market Price of Holdco Class A Common Stock.

Provisions in Holdco’s amended and restated articles of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in Holdco’s management. Holdco’s amended and restated articles of incorporation and amended and restated bylaws include provisions, some of which will become effective only after the date (the “threshold date”) on which the Holdco Class B common stock controlled by Zillow’s founders represents less than 7% of the aggregate number of shares of Holdco’s outstanding Class A common stock and Class B common stock, that:

 

    set forth the structure of Holdco’s capital stock, which concentrates voting control of matters submitted to a vote of Holdco shareholders with the holders of Holdco Class B common stock, which will be held or controlled by Zillow’s founders;

 

    authorize the Holdco board to issue, without further action by Holdco shareholders, 30,000,000 shares of undesignated preferred stock, subject, prior to the threshold date, to the approval rights of the holders of Holdco Class B common stock;

 

    authorize the Holdco board to issue, without further action by Holdco shareholders, up to 600,000,000 shares of nonvoting Class C capital stock;

 

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    establish that the Holdco board will be divided into three classes, Class I, Class II, and Class III, with each class serving three-year staggered terms;

 

    prohibit cumulative voting in the election of directors;

 

    provide that, after the threshold date, Holdco’s directors may be removed only for cause;

 

    provide that, after the threshold date, vacancies on the Holdco board may be filled only by the affirmative vote of a majority of directors then in office or by the sole remaining director;

 

    provide that only the Holdco board may change the board’s size;

 

    specify that special meetings of Holdco’s shareholders can be called only by its board, the chair of its board, its chief executive officer, its president or, prior to the threshold date, holders of at least 25% of all the votes entitled to be cast on any issue proposed to be considered at any such special meeting;

 

    establish an advance notice procedure for shareholder proposals to be brought before a meeting of shareholders, including proposed nominations of persons for election to the Holdco board;

 

    require the approval of the Holdco board or the holders of at least two-thirds of all the votes entitled to be cast by Holdco shareholders generally in the election of directors, voting together as a single group, to amend or repeal its bylaws; and

 

    require the approval of not less than two-thirds of all the votes entitled to be cast on a proposed amendment, voting together as a single group, to amend certain provisions of its articles of incorporation.

Prior to the threshold date, Holdco’s directors can be removed with or without cause by holders of Holdco Class A common stock and Class B common stock, voting together as a single group, and vacancies on the board of directors may be filled by such shareholders, voting together as a single group. Given the structure of Holdco’s common stock, Zillow’s founders, Richard Barton and Lloyd Frink, who will hold or control all shares of Holdco Class B common stock, will have the ability for the foreseeable future to control these shareholder actions. See the risk factor above titled “The Structure of Holdco’s Capital Stock as Contained in Its Charter Documents Has the Effect of Concentrating Voting Control With Zillow’s Founders, and Limits Your Ability to Influence Corporate Matters.”

The provisions described above, after the threshold date, may frustrate or prevent any attempts by Holdco shareholders to replace or remove Holdco’s current management by making it more difficult for shareholders to replace members of its board, which board is responsible for appointing its management. In addition, because Holdco is incorporated in the State of Washington, it is governed by the provisions of Chapter 23B.19 of the WBCA, which prohibits certain business combinations between Holdco and certain significant shareholders unless specified conditions are met. These provisions may also have the effect of delaying or preventing a change of control of Holdco, even if this change of control would benefit its shareholders.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

ZILLOW, INC. AND TRULIA, INC.

Introduction to Unaudited Pro Forma Condensed Combined Financial Statements

The following unaudited pro forma condensed combined financial statements are based upon the historical consolidated financial statements of each of Zillow and Trulia, as adjusted to include the pro forma impact of the recent acquisitions of StreetEasy, Inc. by Zillow and Market Leader, Inc. by Trulia, respectively, included below in this joint proxy statement/prospectus, and adjusted to give effect to the mergers. The unaudited pro forma condensed combined balance sheet as of September 30, 2014 is presented as if the mergers were completed on September 30, 2014. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2014 and the year ended December 31, 2013 is presented as if the mergers were completed on January 1, 2013. The pro forma consolidated financial statements of Trulia have been adjusted to reflect certain reclassifications in order to conform to Zillow’s financial statement presentation.

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting with Zillow considered the accounting acquirer of Trulia. Under the acquisition method of accounting, the purchase price is allocated to the underlying Trulia tangible and intangible assets acquired and liabilities assumed based on their respective fair market values as of September 30, 2014 with any excess purchase price allocated to goodwill.

As of the date of this joint proxy statement/prospectus, Zillow has not completed the detailed valuation studies necessary to arrive at the required estimates of the fair value of the Trulia assets to be acquired and the liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform Trulia’s accounting policies to Zillow’s accounting policies. A final determination of the fair value of Trulia’s assets and liabilities, including intangible assets with both indefinite or finite lives, will be based on the actual net tangible and intangible assets and liabilities of Trulia that exist as of the closing date of the mergers and, therefore, cannot be made prior to the completion of the mergers. In addition, the value of the consideration to be paid by Zillow upon the consummation of the mergers will be determined based on the closing price per share of Zillow’s Class A common stock on the closing date of the mergers. As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analyses are performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined financial statements presented below. Zillow estimated the fair value of Trulia’s assets and liabilities as of the anticipated closing date of the mergers based on discussions with Trulia’s management, preliminary valuation studies, due diligence and information presented in Trulia’s public filings. Until the mergers are completed, both companies are limited in their ability to share certain information. Upon completion of the mergers, final valuations will be performed. Any increases or decreases in the fair value of relevant balance sheet amounts upon completion of the final valuations will result in adjustments to the pro forma balance sheet and/or statements of operations. The final purchase price allocation may be different than that reflected in the pro forma purchase price allocation presented herein, and this difference may be material.

Assumptions and estimates underlying the unaudited adjustments to the pro forma condensed combined financial statements (the “pro forma adjustments”) are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial statements. The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are: (1) directly attributable to the mergers; (2) factually supportable; and (3) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the consolidated results of Holdco following the mergers. The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the mergers occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial statements do not purport to project the future operating results or financial position of Holdco following the mergers.

 

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The unaudited pro forma condensed combined financial statements, although helpful in illustrating the financial characteristics of Holdco under one set of assumptions, do not reflect the benefits of expected cost savings (or associated costs to achieve such savings) or other factors that may result as a consequence of the mergers and, accordingly, do not attempt to predict or suggest future results. Specifically, the unaudited pro forma condensed combined statements of operations exclude projected operating efficiencies and synergies expected to be achieved as a result of the mergers. Also, the unaudited pro forma condensed combined financial statements do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the mergers that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrent with, the closing of the mergers are not included in the unaudited pro forma condensed combined statements of operations. However, the estimated impact of such transaction expenses is reflected in the unaudited pro forma condensed combined balance sheet as an increase to accumulated deficit and an increase in accrued expenses and other current liabilities. Further, the unaudited pro forma condensed combined financial statements do not reflect the effect of any regulatory actions that may impact the results of Holdco following the mergers.

The unaudited pro forma condensed combined financial statements are based on and should be read in conjunction with:

 

    the accompanying notes to the unaudited pro forma condensed combined financial statements;

 

    the unaudited condensed financial statements of RentJuice Corporation as of March 31, 2012 and for the three months ended March 31, 2012 and 2011, included in Exhibit 99.2 to Zillow’s Current Report on Form 8-K/A filed with the SEC on June 13, 2012, which are incorporated by reference in this joint proxy statement/prospectus;

 

    the audited financial statements of RentJuice Corporation as of and for the year ended December 31, 2011, included in Exhibit 99.2 to Zillow’s Current Report on Form 8-K/A filed with the SEC on June 13, 2012, which are incorporated by reference in this joint proxy statement/prospectus;

 

    the unaudited condensed financial statements of StreetEasy, Inc., as of June 30, 2013 and for the six months ended June 30, 2013 and 2012, included in Exhibit 99.2 to Zillow’s Current Report on Form 8-K/A filed with the SEC on November 5, 2013, which are incorporated by reference in this joint proxy statement/prospectus;

 

    the audited financial statements of StreetEasy, Inc., as of and for the year ended December 31, 2012, included in Exhibit 99.3 to Zillow’s Current Report on Form 8-K/A filed with the SEC on November 5, 2013, which are incorporated by reference in this joint proxy statement/prospectus;

 

    the audited financial statements of Zillow as of and for the year ended December 31, 2013, included in Zillow’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on February 18, 2014 and incorporated by reference in this joint proxy statement/prospectus;

 

    the unaudited condensed financial statements of Zillow as of March 31, 2014 and for the three months ended March 31, 2014 and 2013, included in Zillow’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 filed with the SEC on May 8, 2014 and incorporated by reference in this joint proxy statement/prospectus, the unaudited condensed consolidated financial statements of Zillow as of June 30, 2014 and for the three and six month periods ended June 30, 2014 and 2013, included in Zillow’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 filed with the SEC on August 6, 2014 and incorporated by reference in this joint proxy statement/prospectus, and the unaudited condensed consolidated financial statements of Zillow as of September 30, 2014 and for the three and nine month periods ended September 30, 2014 and 2013, included in Zillow’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 filed with the SEC on November 6, 2014 and incorporated by reference in this joint proxy statement/prospectus;

 

   

the audited consolidated balance sheets of Market Leader, Inc. as of December 31, 2011 and 2012 and the related consolidated statements of operations, shareholders’ equity and cash flows for the years

 

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ended December 31, 2011 and 2012, and the related notes, the related financial statements schedule and “Management’s Annual Report on Internal Control Over Financial Reporting,” included in Exhibit 99.1 to Trulia’s Current Report on Form 8-K/A filed with the SEC on November 1, 2013, which are incorporated by reference in this joint proxy statement/prospectus;

 

    the unaudited condensed consolidated balance sheets of Market Leader, Inc. as of June 30, 2013, and the unaudited condensed consolidated statement of operations, shareholders’ equity and cash flows for the six months ended June 30, 2012 and 2013, and the related notes, included in Exhibit 99.2 to Trulia’s Current Report on Form 8-K/A filed on November 1, 2013, which is incorporated by reference in this joint proxy statement/prospectus;

 

    the unaudited condensed consolidated statement of operations of Market Leader, Inc. for the period from January 1, 2013 to August 20, 2013, included in Exhibit 99.4 to Trulia’s Current Report on Form 8-K filed with the SEC on December 10, 2013, which is incorporated by reference in this joint proxy statement/prospectus;

 

    the audited consolidated financial statements of Trulia as of and for the year ended December 31, 2013, included in Trulia’s Annual Report on Form 10-K/A for the year ended December 31, 2013 filed with the SEC on May 23, 2014 and incorporated by reference in this joint proxy statement/prospectus;

 

    the unaudited condensed consolidated financial statements of Trulia as of March 31, 2014 and for the three months ended March 31, 2014 and 2013, included in Trulia’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014, filed with the SEC on May 2, 2014 and incorporated by reference in this joint proxy statement/prospectus, the unaudited condensed consolidated financial statements of Trulia as of June 30, 2014 and for the three and six month periods ended June 30, 2014 and 2013, included in Trulia’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, filed with the SEC on August 8, 2014 and incorporated by reference in this joint proxy statement/prospectus, and the unaudited condensed consolidated financial statements of Trulia as of September 30, 2014 and for the three and nine month periods ended September 30, 2014 and 2013, included in Trulia’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014, filed with the SEC on November 6, 2014 and incorporated by reference in this joint proxy statement/prospectus; and

 

    other information relating to Zillow and Trulia contained in or incorporated by reference into this joint proxy statement/prospectus.

See “Where You Can Find More Information,” “Zillow Selected Historical Financial Data and Other Data” and “Trulia Selected Historical Financial Data and Other Data.”

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2014

(in thousands)

 

     Historical     Pro Forma
Adjustments

(Note 5)
    Pro Forma
Combined
 
     Zillow     Trulia      

Assets

        

Current assets:

        

Cash and cash equivalents

   $ 122,765      $ 212,114      $ —        $ 334,879   

Short-term investments

     243,555        —          —          243,555   

Accounts receivable, net

     21,794        14,161        —          35,955   

Prepaid expenses and other current assets

     8,921        8,197        3,992  (a)      21,110   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     397,035        234,472        3,992        635,499   

Restricted cash

     —          6,912        —          6,912   

Long-term investments

     92,130        —          —          92,130   

Property and equipment, net

     38,335        41,391        (17,311 )(b)      62,415   

Goodwill

     96,352        255,904        1,259,064  (c)      1,611,320   

Intangible assets, net

     24,864        106,439        487,561  (d)      618,864   

Other assets

     494        7,547        (6,894 )(e)      1,147   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 649,210      $ 652,665      $ 1,726,412      $ 3,028,287   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

        

Current liabilities:

        

Accounts payable

   $ 13,366      $ 1,799      $ —        $ 15,165   

Accrued expenses and other current liabilities

     17,756        22,409        76,658  (f)      116,823   

Accrued compensation and benefits

     6,784        10,496        —          17,280   

Deferred revenue

     14,721        9,932        (4,632 )(g)      20,021   

Deferred rent, current portion

     834        813        —          1,647   

Capital lease liability, current portion

     —          24        —          24   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     53,461        45,473        72,026        170,960   

Deferred rent, net of current portion

     10,549        9,850        —          20,399   

Capital lease liability, net of current portion

     —          80        —          80   

Long-term debt

     —          230,000        —          230,000   

Deferred tax liabilities and other long-term liabilities

     —          3,538        123,578  (h)      127,116   

Commitments and contingencies

        

Shareholders’ equity:

        

Preferred stock

     —          —          —          —     

Common stock

     4        —          2  (i)      6   

Additional paid-in capital

     702,030        485,615        1,485,573  (j)      2,673,218   

Accumulated deficit

     (116,834     (121,891     45,233  (k)      (193,492
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 649,210      $ 652,665      $ 1,726,412      $ 3,028,287   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2014

(in thousands, except per share data)

 

    Historical     Pro Forma
Adjustments

(Note 5)
    Pro Forma
Combined
 
    Zillow     Trulia      

Revenue

  $ 233,564      $ 185,719      $ —        $ 419,283   

Costs and expenses:

       

Cost of revenue (exclusive of amortization)

    20,636        32,996        (3,456 )(l)      50,176   

Sales and marketing

    129,907        109,516        (18,159 )(m)      221,264   

Technology and development

    58,150        41,931        36,260  (n)      136,341   

General and administrative

    44,968        37,162        1,379  (o)      83,509   

Acquisition-related costs

    13,384        10,832        (24,216 )(p)      —     

Restructuring costs

    —          4,797        —          4,797   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    267,045        237,234        (8,192     496,087   
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (33,481     (51,515     8,192        (76,804

Other income

    768        400        —          1,168   

Interest expense

    —          (5,529     771  (q)      (4,758
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

    (32,713     (56,644     8,963        (80,394

Income tax expense

    —          (363     —          (363
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

  $ (32,713   $ (57,007   $ 8,963      $ (80,757
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share — basic and diluted

  $ (0.82   $ (1.54     $ (1.43

Weighted-average shares outstanding — basic and diluted (Note 6)

    39,810        37,112          56,288   

See accompanying notes to unaudited pro forma condensed combined financial statements.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2013

(in thousands, except per share data)

 

    Pro Forma (1)     Pro Forma
Adjustments

(Note 5)
    Pro Forma
Combined
 
    Zillow     Trulia      

Revenue

  $ 202,086      $ 178,151      $ —        $ 380,237   

Costs and expenses:

       

Cost of revenue (exclusive of amortization)

    19,299        34,138        (10,503 )(l)      42,934   

Sales and marketing

    110,244        93,455        (6,027 )(m)      197,672   

Technology and development

    51,232        47,583        51,660  (n)      150,475   

General and administrative

    39,566        43,223        10,020  (o)      92,809   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    220,341        218,399        45,150        483,890   
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (18,255     (40,248     (45,150     (103,653

Other income

    398        132        —          530   

Interest expense

    —          (1,107     38  (q)      (1,069

Loss on debt extinguishment

    —          (141     —          (141
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

    (17,857     (41,364     (45,112     (104,333

Income tax benefit

    4,111        7,496        (12,019 )(r)      (412
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

  $ (13,746   $ (33,868   $ (57,131   $ (104,745
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share — basic and diluted

  $ (0.38   $ (0.94     $ (2.02

Weighted-average shares outstanding — basic and diluted (Note 6)

    36,029        35,922          51,978   

 

(1) Based upon the historical consolidated financial statements of each of Zillow and Trulia and adjusted to include the pro forma impact of the acquisitions of StreetEasy, Inc. by Zillow and Market Leader, Inc. by Trulia, both of which acquisitions occurred during the year ended December 31, 2013.

See accompanying notes to unaudited pro forma condensed combined financial statements.

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

ZILLOW, INC. AND TRULIA, INC.

Note 1. Description of Transaction

On July 28, 2014, Zillow, Holdco, and Trulia entered into the merger agreement providing for the acquisition of Trulia by Zillow. Prior to the closing, Holdco will form two wholly owned subsidiaries, Zillow Merger Sub and Trulia Merger Sub. Pursuant to the merger agreement, Zillow Merger Sub will merge with and into Zillow, the separate existence of Zillow Merger Sub will cease, and Zillow will be the surviving corporation, and Trulia Merger Sub will merge with and into Trulia, the separate existence of the Trulia Merger Sub will cease, and Trulia will be the surviving corporation. As a result of the mergers, the Zillow surviving corporation and the Trulia surviving corporation will each become a wholly owned subsidiary of Holdco.

At the effective time of the Zillow merger, each share of Zillow Class A common stock, other than Zillow excluded shares (as defined below) and Zillow dissenting shares, will be converted into the right to receive one share of fully paid and nonassessable Holdco Class A common stock, and each share of Zillow Class B common stock will be converted into the right to receive one share of fully paid and nonassessable Holdco Class B common stock. Shares of Zillow common stock held by Zillow, Holdco, Trulia, or any direct or indirect wholly owned subsidiary of Zillow or Trulia (“Zillow excluded shares”) will be canceled and will not receive the Zillow merger consideration. Generally, each Zillow stock option and restricted stock unit that is outstanding (whether or not vested or exercisable) as of the effective time of the Zillow merger will be assumed by Holdco and converted into awards of Holdco Class A common stock and will remain subject to the same terms, conditions and restrictions as the original option or award. Any unvested shares of Zillow Class A common stock that are subject to a repurchase option, risk of forfeiture or other condition as of the effective time of the Zillow merger will be exchanged for shares of Holdco Class A common stock that will also be unvested and subject to the same repurchase option, risk of forfeiture or other condition. Each Zillow restricted unit that is outstanding as of the effective time of the Zillow merger will be assumed by Holdco and converted into the right to receive Holdco Class A common stock and will remain subject to the same terms, conditions and restrictions as the original restricted unit.

At the effective time of the Trulia merger, each share of Trulia common stock, other than Trulia excluded shares (as defined below), will be converted into the right to receive 0.444 of a share of fully paid and nonassessable Holdco Class A common stock. Shares of Trulia common stock held by Trulia, Holdco, Zillow, or any direct or indirect wholly owned subsidiary of Zillow or Trulia (“Trulia excluded shares”) will be canceled and will not receive the Trulia merger consideration. Generally, each Trulia stock option, restricted stock unit, and stock appreciation right that is outstanding (whether or not vested or exercisable) as of the effective time of the Trulia merger will be assumed by Holdco and converted into awards of Holdco Class A common stock and will remain subject to the same terms, conditions and restrictions as the original option or award, subject to specified adjustments to reflect the effect of the Trulia exchange ratio. Each outstanding unvested Trulia option and restricted stock unit held by a member of the Trulia board of directors who is not an employee of Trulia or any subsidiary of Trulia will become fully vested immediately prior to the effective time of the Trulia merger in accordance with the terms of the applicable award agreements.

The merger agreement provides that the respective obligations of Trulia, Zillow and Holdco to complete the mergers are subject to the satisfaction or waiver of certain conditions of closing, including: (a) approval of the merger agreement by Zillow’s shareholders and adoption of the merger agreement by Trulia’s stockholders; (b) expiration or early termination of all applicable waiting periods under the HSR Act; (c) absence of any applicable restraining order or injunction prohibiting the mergers; (d) effectiveness of the registration statement with respect to the Holdco common stock to be issued in the mergers and the absence of any stop order or proceedings initiated by the SEC for that purpose; (e) absence of a material adverse effect with respect to each of Zillow and Trulia having occurred since the date of the merger agreement; (f) accuracy of the representations and warranties of each party, subject to specified materiality thresholds; (g) performance in all material respects by each party of its obligations under the merger agreement; (h) authorization for listing the Holdco Class A

 

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common stock on NASDAQ; and (i) with respect to Zillow, the absence of certain legal proceedings that seek to restrain the mergers or restrict the businesses of Zillow or Trulia. The merger agreement contains termination rights for Trulia and Zillow applicable upon: (a) a final non-appealable order or other action prohibiting the mergers; (b) the eighteen-month anniversary of the date of the merger agreement; (c) the failure of either Zillow’s shareholders or Trulia’s stockholders to approve the merger agreement and actions contemplated by the merger agreement by the required votes; (d) a breach by the other party that cannot be cured within 30 days’ notice of such breach, if such breach would result in the failure of the conditions to closing set forth in the merger agreement; (e) certain “triggering events,” including a change in recommendation relating to the mergers by the other party’s board of directors; and (f) in certain circumstances, Trulia’s entry into a contract with respect to a superior proposal.

A detailed discussion of the merger agreement and the mergers may be found in the sections of this joint proxy statement/prospectus entitled “The Mergers” and “The Merger Agreement.”

Note 2. Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting with Zillow considered the accounting acquirer of Trulia. Under the acquisition method of accounting, the purchase price is allocated to the underlying Trulia tangible and intangible assets acquired and liabilities assumed based on their respective fair market values as of September 30, 2014 with any excess purchase price allocated to goodwill.

The unaudited pro forma condensed combined financial statements are based upon the historical consolidated financial statements of each of Zillow and Trulia, as adjusted to give effect to the mergers. In addition, the historical consolidated statements of operations of each of Zillow and Trulia for the year ended December 31, 2013 have been adjusted to include the pro forma impact of the recent acquisitions of StreetEasy, Inc. by Zillow and Market Leader, Inc. by Trulia, respectively, assuming those acquisitions were completed on January 1, 2013. The unaudited pro forma condensed combined balance sheet as of September 30, 2014 is presented as if the mergers were completed on September 30, 2014. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2014 and the year ended December 31, 2013 is presented as if the mergers were completed on January 1, 2013. The pro forma consolidated financial statements of Trulia have been adjusted to reflect certain reclassifications in order to conform to Zillow’s financial statement presentation. However, the unaudited pro forma condensed combined financial statements may not reflect all adjustments necessary to conform the accounting policies of Trulia to those of Zillow due to limitations on the availability of information as of the date of this joint proxy statement/prospectus.

The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the results of operations or financial position of Holdco that would have been reported had the mergers been completed as of the dates presented, and should not be taken as representative of the future results of operations or financial position of Holdco. The pro forma adjustments represent management’s estimates based on information available as of the date of this joint proxy statement/prospectus and are subject to change as additional information becomes available and additional analyses are performed. The unaudited pro forma condensed combined financial statements do not reflect the impact of expected cost savings (or associated costs to achieve such savings) or other factors that may result as a consequence of the mergers and, accordingly, do not attempt to predict or suggest future results. Also, the unaudited pro forma condensed combined financial statements do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the mergers that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrent with, the closing of the mergers are not included in the unaudited pro forma combined condensed statements of operations. However, the estimated impact of such transaction expenses is reflected in the pro forma balance sheet as an increase to accumulated deficit and an increase in accrued expenses and other current liabilities.

 

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Completion of the mergers is subject to regulatory approvals in the United States and approval by the shareholders of Zillow and the stockholders of Trulia. As of the date of this joint proxy statement/prospectus, the mergers are expected to be completed in 2015.

Note 3. Preliminary Estimated Purchase Price

The total preliminary estimated purchase price of approximately $1.9 billion was determined based on the number of shares of Trulia common stock and equity awards outstanding under Trulia’s stock plans as of October 27, 2014. In all cases in which Zillow’s closing stock price is a determining factor in arriving at the amount of merger consideration, the stock price assumed for the total preliminary purchase price is the closing price of Zillow Class A common stock on NASDAQ on October 27, 2014 ($105.55 per share), the most recent date practicable in the preparation of this joint proxy statement/prospectus. The following is a preliminary estimate of the consideration expected to be transferred to effect the acquisition of Trulia (in thousands):

 

Common stock

   $ 1,770,503   

Substituted stock options attributable to pre-combination service

     56,250   

Substituted restricted stock units attributable to pre-combination service

     69,865   

Substituted stock appreciation rights attributable to pre-combination service

     1,166   
  

 

 

 

Total preliminary estimated purchase price

   $ 1,897,784   
  

 

 

 

Trulia stockholders will not receive any fractional shares of Holdco common stock in the Trulia merger. Instead of receiving any fractional shares, each holder of Trulia common stock will be paid an amount in cash (without interest) equal to such fractional amount multiplied by the last reported sale price of Zillow Class A common stock on NASDAQ on the last complete trading day prior to the date of the effective time of the Trulia merger. The amount of cash to be paid for fractional shares will be determined at the closing of the mergers.

A portion of the preliminary estimated merger consideration has been attributed to the substitution of Trulia’s stock options, restricted stock units, and stock appreciation rights outstanding as of October 27, 2014, for corresponding stock options, restricted stock units, and stock appreciation rights to purchase or vest in shares of Holdco Class A common stock, all at an exchange ratio of 0.444. No effect has been given to any other new shares of Zillow or Trulia common stock or other equity awards that may be issued or granted subsequent to the date of this joint proxy statement/prospectus and before the closing date of the mergers.

The aggregate purchase price under the acquisition method of accounting will be based on the actual closing price per share of Zillow Class A common stock on the closing date of the mergers, which could differ materially from the assumed value disclosed in the notes to the unaudited pro forma condensed combined financial statements herein. If the actual closing price per share of Zillow Class A common stock on the closing date is higher than the assumed amount, it is expected that the actual amount recorded for goodwill will be higher; conversely, if the actual closing price is lower, the actual amount recorded for goodwill will be lower. A hypothetical 10% increase or decrease in the closing price of Zillow Class A common stock on the closing date of the mergers would have an impact of approximately $177 million on the purchase price and subsequent goodwill balance.

Note 4. Preliminary Estimated Purchase Price Allocation

The total preliminary estimated purchase price described above has been allocated to Trulia’s tangible and intangible assets and liabilities for purposes of these unaudited pro forma condensed combined financial statements based on their estimated relative fair values as of the anticipated closing date of the mergers. Goodwill is calculated as the difference between the preliminary estimate of fair value of the consideration expected to be transferred and the preliminary estimates of fair value assigned to the assets acquired and liabilities assumed. Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any indicators of impairment.

 

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The total preliminary estimated purchase price was allocated as follows, based on Trulia’s September 30, 2014 balance sheet (in thousands):

 

Cash and cash equivalents

   $ 212,114   

Accounts receivable

     14,161   

Prepaid expenses and other current assets

     12,189   

Restricted cash

     6,912   

Property and equipment

     24,080   

Other assets

     653   

Identifiable intangible assets

     594,000   

Goodwill

     1,514,968   

Accounts payable, accrued expenses and other current liabilities

     (24,208

Accrued compensation and benefits

     (10,496

Deferred revenue

     (5,300

Other current liabilities

     (837

Long-term debt

     (230,000

Debt premium recorded in additional paid-in capital

     (73,406

Deferred tax liabilities

     (126,617

Other long-term liabilities

     (10,429
  

 

 

 

Total preliminary estimated purchase price allocation

   $ 1,897,784   
  

 

 

 

Net tangible assets were valued at their respective carrying amounts, as Zillow believes that these amounts approximate their current fair values.

The preliminary estimated fair value of identifiable intangible assets to be acquired consisted of the following (in thousands):

 

     Preliminary
Fair Value
     Estimated
Useful Life
(in years)

Trulia trade names and trademarks

   $ 327,000       Indefinite

Market Leader trade names and trademarks

     7,000       5

Customer relationships

     135,000       6-8

Developed technology

     106,000       5-7

Advertising relationships

     13,000       3

MLS home data feeds

     6,000       10
  

 

 

    

Total

   $ 594,000      
  

 

 

    

The preliminary estimated fair value of the intangible assets acquired was determined by Zillow, and Zillow considered or relied in part upon a valuation report of a third-party expert. Zillow used an income approach to measure the fair value of the trade names and trademarks and the developed technology based on the relief-from-royalty method. Zillow used an income approach to measure the fair value of the customer relationships based on the excess earnings method, whereby the fair value is estimated based upon the present value of cash flows that the applicable asset is expected to generate. Zillow used an income approach to measure the fair value of the advertising relationships based on a with and without analysis, whereby the fair value is estimated based on the present value of cash flows the combined business is expected to generate with and without the advertising relationships. Zillow used a cost approach to measure the fair value of the MLS home data feeds based on the estimated cost to replace the data feed library. These fair value measurements were based on Level 3 measurements under the fair value hierarchy.

A portion of the total preliminary estimated purchase price was allocated to Trulia’s Convertible Senior Notes due in 2020 (the “2020 Notes”). If the mergers are completed, Holdco will enter into a supplemental indenture in respect of the 2020 Notes in the aggregate principal amount of $230.0 million, which will provide,

 

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among other things, that, at the effective time of the Trulia merger, (i) each outstanding Convertible Senior Note will no longer be convertible into shares of Trulia common stock and will be convertible solely into shares of Holdco Class A common stock, pursuant to, and in accordance with, the terms of the indenture governing the Convertible Senior Notes, and (ii) Holdco will guarantee all of the obligations of Trulia under the Convertible Senior Notes and related indenture. The aggregate principal amount of the 2020 Notes is due on December 15, 2020 if not earlier converted or redeemed. Interest is payable on the 2020 Notes at the rate of 2.75% semi-annually. The 2020 Notes cannot be redeemed prior to December 20, 2018.

In connection with the supplemental indenture in respect of the 2020 Notes, the initial conversion ratio of 27.8303 shares of Trulia common stock per $1,000 principal amount of notes will be adjusted to 12.3567 shares of Holdco Class A common stock per $1,000 principal amount of notes based on the conversion ratio of 0.444 per the merger agreement. The preliminary estimated fair value of the 2020 Notes is approximately $303.4 million. We determined the preliminary estimated fair value of the 2020 Notes through use of option pricing and discounted cash flow models. The fair value is classified as Level 3 due to the use of significant unobservable inputs such as estimated long-term volatility of Holdco’s Class A common stock and credit risk premium.

In accordance with the accounting guidance related to business combinations, the 2020 Notes will be recognized at fair value as of the assumed date of the mergers. Given the preliminary fair value of the 2020 Notes of $303.4 million is at a substantial premium to the principal amount of $230.0 million, the premium amount of $73.4 million has been recorded as additional paid-in capital in the unaudited pro forma condensed combined balance sheet as of September 30, 2014. Accordingly, Holdco has recognized the liability component of the 2020 Notes at the stated par amount in the unaudited pro forma condensed combined balance sheet as of September 30, 2014. The conversion feature is not required to be bifurcated and separately accounted for as it meets the equity scope exception given the conversion feature (i) will be indexed to Holdco’s Class A common stock and (ii) will be classified in shareholder’s equity. Further, the 2020 notes do not permit or require Holdco to settle the debt in cash (in whole or in part) upon conversion.

Assuming the mergers were completed as of September 30, 2014, a portion of the total preliminary estimated purchase price was allocated to deferred tax liabilities primarily related to an indefinite-lived intangible asset generated in connection with the mergers. Due to the recognition of a $327.0 million indefinite-lived Trulia trade name and trademark intangible asset as of the assumed completion date of the mergers, a deferred tax liability of $126.6 million is recognized which cannot be offset by the recognized deferred tax assets.

The final allocation will be based upon valuations and other analyses for which there is currently insufficient information to make a definitive allocation. Accordingly, the purchase price allocation adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial statements. The final purchase price allocation will be determined after the closing of the mergers and after completion of a thorough analysis to determine the fair value of Trulia’s tangible assets and liabilities and identifiable intangible assets and liabilities. As a result, the final acquisition accounting adjustments, including those resulting from conforming Trulia’s accounting policies to those of Zillow, could differ materially from the pro forma adjustments presented herein. Any increase or decrease in the fair value of Trulia’s tangible and identifiable intangible assets and liabilities as compared to the information shown herein would also change the portion of purchase price allocable to goodwill.

Note 5. Pro Forma Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet:

(a) To record the combined group’s net current deferred tax assets as of September 30, 2014.

(b) To eliminate the net book value of Trulia’s capitalized product development costs, as the fair value of capitalized product development costs is reflected in the developed technology intangible asset acquired.

 

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(c) To record the following adjustments to goodwill (in thousands):

 

To record the preliminary fair value of goodwill related to the mergers

   $ 1,392,343   

To record the goodwill impact related to deferred taxes recognized related to the mergers*

     122,625   

To eliminate Trulia’s historical goodwill

     (255,904
  

 

 

 

Total adjustments to goodwill

   $ 1,259,064   
  

 

 

 

 

* The goodwill impact is primarily due to the deferred tax liability of $126.6 million associated with the recognition of an indefinite life Trulia trade name and trademark intangible assets recorded in connection with the mergers that cannot be offset by recognized deferred tax assets, offset by the impact of the deferred tax asset of $4.0 million described in (a) above.

(d) To record the following adjustments to intangible assets (in thousands):

 

To record the preliminary fair value of intangible assets related to the mergers

   $ 594,000   

To eliminate Trulia’s historical intangible assets

     (106,439
  

 

 

 

Total adjustments to intangible assets

   $ 487,561   
  

 

 

 

The following table summarizes the preliminary fair value of the intangible assets acquired and the related amortization expense for the nine months ended September 30, 2014 and for the year ended December 31, 2013 (in thousands):

 

     Preliminary
Fair Value
     Amortization
Expense for
the
Nine Months
Ended
September 30,
2014*
     Amortization
Expense for
the Year
Ended
December 31,
2013*
     Estimated
Useful Life
(in years)

Trulia trade names and trademarks

   $ 327,000       $ —         $ —         Indefinite

Market Leader trade names and trademarks

     7,000         1,050         1,400       5

Customer relationships

     135,000         14,580         19,440       6-8

Developed technology

     106,000         11,829         15,772       5-7

Advertising relationships

     13,000         3,250         4,333       3

MLS home data feeds

     6,000         450         600       10
  

 

 

    

 

 

    

 

 

    

Total

   $ 594,000       $ 31,159       $ 41,545      
  

 

 

    

 

 

    

 

 

    

 

* Pro forma amortization expense is calculated herein using the straight-line method.

(e) To eliminate Trulia’s historical unamortized debt issuance costs associated with the 2020 Notes which do not affect the estimate of fair value of the recognized debt.

(f) To record the following adjustments to accrued expenses and other current liabilities (in thousands):

 

To accrue Zillow’s estimated transaction costs

   $ 15,024   

To accrue Trulia’s estimated transaction costs

     61,634   
  

 

 

 

Total adjustments to accrued expenses and other current liabilities

   $ 76,658   
  

 

 

 

As of and for the nine months ended September 30, 2014, approximately $24.2 million in acquisition-related costs have been reflected in the historical financial statements of Zillow and Trulia. Of the combined total $100.9 million in estimated transaction costs, $66.5 million relates to investment banker fees and advisory fees as

 

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specified in the relevant agreements. The remaining $34.4 million in estimated transaction costs primarily relate to professional fees associated with the mergers, including legal, accounting, tax, regulatory filing and printing fees to be paid to third parties based on actual expenses incurred to date and each party’s best estimate of its remaining fees as provided to Zillow and Trulia.

(g) To record the difference between the preliminary fair value and the historical carrying amount of the deferred revenue of Trulia. The preliminary fair value represents an amount equivalent to the estimated cost directly related to fulfilling the obligation plus a normal profit margin to perform the services.

(h) To record the following adjustments to deferred tax liabilities and other long-term liabilities (in thousands):

 

To record a deferred tax liability related to the mergers*

   $ 126,617   

To eliminate Trulia’s historical net deferred tax liability**

     (3,039
  

 

 

 

Total adjustments to deferred tax liabilities and other long-term liabilities

   $ 123,578   
  

 

 

 

 

* The $126.6 million deferred tax liability relates to the recognition of a $327.0 million indefinite-lived Trulia trade name and trademark intangible asset, which deferred tax liability cannot be offset by deferred tax assets.
** Trulia’s historical net deferred tax liability arose from amortizing intangible assets for tax purposes from business combinations that occurred prior to Zillow’s proposed acquisition of Trulia.

(i) To record the par value related to the shares of Holdco common stock issued as a portion of the preliminary merger consideration. For purposes of determining this adjustment, a total of 16,774,067 shares of Holdco Class A common stock were assumed issued.

 

(j) To record the following adjustments to additional paid-in capital (in thousands):

 

To record the fair value of the shares of common stock issued as a portion of the preliminary merger consideration less the par value

   $ 1,770,501   

To eliminate the historical additional paid-in capital of Trulia

     (485,615

To record the debt premium related to the 2020 Notes

     73,406   

To record the preliminary fair value of consideration transferred related to substituted stock options attributable to pre-combination service

     56,250   

To record the preliminary fair value of consideration transferred related to substituted restricted stock units attributable to pre-combination service

     69,865   

To record the preliminary fair value of consideration transferred related to substituted stock appreciation rights attributable to pre-combination service

     1,166   
  

 

 

 

Total adjustments to additional paid-in capital

   $ 1,485,573   
  

 

 

 

(k) To record the following adjustments to accumulated deficit (in thousands):

 

To eliminate the historical accumulated deficit of Trulia

   $  121,891   

To record Trulia’s estimated transaction costs

     (61,634

To record Zillow’s estimated transaction costs

     (15,024
  

 

 

 

Total adjustments to accumulated deficit

   $ 45,233   
  

 

 

 

 

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The following pro forma adjustments are included in the unaudited pro forma condensed combined statements of operations:

(l) To record the following adjustments to cost of revenue (in thousands):

 

     Nine Months
Ended
September 30,
2014
    Year Ended
December 31,
2013
 

To reclassify and reallocate certain Trulia costs of revenue*

   $ (3,306   $ (10,030

To record share-based compensation expense related to share-based awards assumed by Zillow attributable to post-combination service**

     73        (253

To eliminate amortization expense related to Trulia’s historical acquired intangible assets

     (223     (220
  

 

 

   

 

 

 

Total adjustments to cost of revenue

   $ (3,456   $ (10,503
  

 

 

   

 

 

 

 

* To reclassify certain Trulia costs of revenue to technology and development expense, including the reclassification of data license costs, computer equipment, and software, to reclassify credit card processing fees and revenue share payments from sales and marketing expense to cost of revenue, and to reallocate certain corporate level costs, to conform with Zillow’s presentation.
** The pro forma adjustment for share-based awards assumed represents the difference between Trulia’s historical share-based compensation expense and the estimated share-based compensation expense as if the mergers were completed on January 1, 2013. The fair value of Trulia’s share-based awards assumed in connection with the acquisition, including stock options, stock appreciation rights, and restricted stock units, which relate to post-combination service will be recorded by Holdco as share-based compensation expense ratably over the remaining related vesting period of the respective award. The share-based compensation expense related to stock options and stock appreciation rights assumed is estimated at the date of grant using the Black-Scholes-Merton option-pricing model, assuming no dividends, expected volatility of 55%, a risk-free interest rate of 1.01%, and an expected life of three years. For restricted stock and restricted stock units assumed, Zillow uses the market value of Zillow Class A common stock on the date of grant to determine the fair value of the award.

(m) To record the following adjustments to sales and marketing expense (in thousands):

 

     Nine Months
Ended
September 30,
2014
    Year Ended
December 31,
2013
 

To reclassify and reallocate certain Trulia sales and marketing expense*

   $ (13,702   $ (3,098

To record share-based compensation expense related to share-based awards assumed by Zillow attributable to post-combination service**

     377        2,621   

To eliminate amortization expense related to Trulia’s historical intangible assets acquired***

     (4,834     (5,550
  

 

 

   

 

 

 

Total adjustments to sales and marketing expense

   $ (18,159   $ (6,027
  

 

 

   

 

 

 

 

* To reclassify certain Trulia sales and marketing expense to technology and development expense, including the reclassification of connectivity costs and amortization expense, to reclassify credit card processing fees and revenue share payments to cost of revenue, and to reallocate certain corporate level costs, to conform with Zillow’s presentation.
** See (l) above for further details related to the pro forma adjustment for share-based awards assumed.
*** For the year ended December 31, 2013, the adjustment includes the elimination of $3.2 million of amortization expense related to the pro forma impact of the acquisition of Market Leader, Inc. by Trulia.

 

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(n) To record the following adjustments to technology and development expense (in thousands):

 

     Nine Months
Ended
September 30,
2014
    Year Ended
December 31,
2013
 

To reclassify and reallocate certain Trulia technology and development expense*

   $ 12,916      $ 10,406   

To record share-based compensation expense related to share-based awards assumed by Zillow attributable to post-combination service**

     268        6,391   

To record amortization expense related to Trulia’s intangible assets acquired***

     31,159        41,545   

To eliminate amortization expense related to Trulia’s historical acquired intangible assets****

     (3,461     (3,972

To eliminate amortization expense for capitalized product development costs*****

     (4,622     (2,710
  

 

 

   

 

 

 

Total adjustments to technology and development expense

   $ 36,260      $ 51,660   
  

 

 

   

 

 

 

 

* To reclassify certain Trulia costs from sales and marketing expense to technology and development expense, including the reclassification of connectivity costs and amortization expense, to reclassify certain Trulia costs of revenue to technology and development expense, including the reclassification of data license costs, computer equipment, and software, and to reallocate certain corporate level costs, to conform with Zillow’s presentation.
** See (l) above for further details related to the pro forma adjustment for share-based awards assumed.
*** See (d) above for further details related to the pro forma adjustment to record amortization expense related to Trulia’s intangible assets acquired.
**** For the year ended December 31, 2013, the adjustment includes the elimination of $2.3 million of amortization expense related to the pro forma impact of the acquisition of Market Leader, Inc. by Trulia.
***** The fair value of capitalized product development costs is reflected in the developed technology intangible asset acquired.

(o) To record the following adjustments to general and administrative expense (in thousands):

 

     Nine Months
Ended
September 30,
2014
    Year Ended
December 31,
2013
 

To reclassify and reallocate certain Trulia general and administrative expense*

   $ 4,092      $ 2,721   

To record share-based compensation expense related to share-based awards assumed by Zillow attributable to post-combination service**

     505        11,002   

To eliminate amortization expense related to Trulia’s acquired historical intangible assets***

     (3,218     (3,703
  

 

 

   

 

 

 

Total adjustments to general and administrative expense

   $ 1,379      $ 10,020   
  

 

 

   

 

 

 

 

* To reclassify certain Trulia general and administrative expense to technology and development expense, including the reclassification of connectivity costs and amortization expense, and to reallocate certain corporate level costs, to conform with Zillow’s presentation.
** See (l) above for further details related to the pro forma adjustment for share-based awards assumed.
*** For the year ended December 31, 2013, the adjustment includes the elimination of $2.1 million of amortization expense related to the pro forma impact of the acquisition of Market Leader, Inc. by Trulia.

(p) To eliminate historical acquisition-related costs.

(q) To eliminate Trulia’s historical amortization of debt issuance costs associated with the 2020 Notes.

 

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(r) To record the following adjustments to the income tax benefit for the year ended December 31, 2013 (in thousands):

 

To eliminate Zillow’s pro forma income tax benefit

   $ (4,111

To eliminate Trulia’s pro forma income tax benefit

     (7,908
  

 

 

 

Total adjustments to the income tax benefit

   $ (12,019
  

 

 

 

The pro forma income tax benefit adjustments relate to income tax benefits generated in connection with the acquisitions of StreetEasy, Inc. by Zillow and Market Leader, Inc. by Trulia, both of which acquisitions occurred during the year ended December 31, 2013. The combined group will have a full valuation allowance on all definite-lived net deferred tax balances due to uncertainty surrounding the realization of deferred tax assets in the future.

In August 2014, pursuant to the merger agreement, Trulia established a retention pool consisting of restricted stock units for 542,941 shares of Trulia common stock, which vest immediately prior to the closing of the mergers, subject to the recipient’s continued full-time employment or service to Trulia. The estimated pro forma acquisition date fair value of the restricted stock units is approximately $24.2 million. A pro forma adjustment related to the share-based compensation expense associated with these award has not been included in the unaudited pro forma condensed combined statements of operations, as the related share-based compensation expense is a nonrecurring charge. However, the estimated pro forma acquisition date fair value of these restricted stock units has been included in the consideration transferred for substituted restricted stock units attributable to pre-combination service.

Note 6. Pro Forma Net Loss per Share

The basic and diluted pro forma net loss per share is based on the weighted average number of shares of Zillow common stock outstanding for the period presented and adjusted for the estimated number of additional shares of Holdco common stock to be issued in relation to the mergers, assuming for the purposes of the unaudited pro forma condensed combined statements of operations that the closing date of the mergers was January 1, 2013.

For the nine months ended September 30, 2014, the calculation of the number of shares used in the computation of pro forma basic and diluted net loss per share is as follows (in thousands):

 

     Zillow      Trulia      Combined  

Historical basic and diluted weighted average shares outstanding

     39,810         37,112      

Exchange ratio

     —           0.444      
  

 

 

    

 

 

    

 

 

 

Adjusted basic and diluted weighted average shares outstanding

     39,810         16,478         56,288   
  

 

 

    

 

 

    

 

 

 

For the year ended December 31, 2013, the calculation of the number of shares used in the computation of pro forma basic and diluted net loss per share is as follows (in thousands):

 

     Zillow      Trulia      Combined  

Historical basic and diluted weighted average shares outstanding

     36,029         35,922      

Exchange ratio

     —           0.444      
  

 

 

    

 

 

    

 

 

 

Adjusted basic and diluted weighted average shares outstanding

     36,029         15,949         51,978   
  

 

 

    

 

 

    

 

 

 

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

ZILLOW, INC. AND STREETEASY, INC.

Introduction to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2013

The following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is based on the historical financial statements of Zillow and StreetEasy, Inc., formerly known as NMD Interactive, Inc., d/b/a StreetEasy (“StreetEasy”), after giving effect to Zillow’s acquisition of StreetEasy (the “StreetEasy Acquisition”) and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined statement of operations. The effective date of the StreetEasy Acquisition was August 26, 2013.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 represents an update to the unaudited pro forma condensed combined statement of operations for the six month period ended June 30, 2013, as the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is required for purposes of this joint proxy statement/prospectus. The historical unaudited condensed statement of operations of StreetEasy for the six month period ended June 30, 2013 was included as Exhibit 99.2 in Zillow’s Current Report on Form 8-K/A filed with the SEC on November 5, 2013, which is incorporated by reference into this joint proxy statement/prospectus. The historical unaudited condensed statement of operations for StreetEasy for the period from July 1, 2013 to August 26, 2013 are not incorporated by reference into this joint proxy statement/prospectus. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is presented as if the StreetEasy Acquisition was completed on January 1, 2013.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is not intended to represent or be indicative of the results of operations or financial position of Zillow that would have been reported had the StreetEasy Acquisition been completed as of the dates presented, and should not be taken as representative of the future results of operations of Zillow. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 and notes thereto should be read in conjunction with the historical financial statements of Zillow included in Zillow’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on February 18, 2014 and incorporated by reference into this joint proxy statement/prospectus, Zillow’s subsequent quarterly reports on Form 10-Q filed with the SEC and incorporated by reference into this joint proxy statement/prospectus, and the historical financial statements of StreetEasy included as Exhibit 99.2 to Zillow’s Current Report on Form 8-K/A filed with the SEC on November 5, 2013, which is incorporated by reference into this joint proxy statement/prospectus.

The unaudited pro forma condensed combined statement of operations has been presented for informational purposes only. The pro forma information is not necessarily indicative of what Zillow’s and StreetEasy’s combined results of operations actually would have been had the StreetEasy Acquisition been completed as of the date indicated. In addition, the unaudited pro forma condensed combined statement of operations does not purport to project the future combined operating results of Zillow and StreetEasy.

Pursuant to the acquisition method of accounting, the purchase price, calculated as described in Note 3 to the unaudited pro forma condensed combined statement of operations, has been allocated to assets acquired and liabilities assumed based on their respective fair values. The pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined statement of operations.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2013

(in thousands, except per share data)

 

    Historical              
    Zillow     StreetEasy     StreetEasy     Pro Forma
Adjustments
(Note 5)
    Pro Forma
Combined
 
    Year Ended
December 31,
2013
    Six Months
Ended
June 30,
2013
    July 1,
2013 to

August 26,
2013
     

Revenue

  $ 197,545      $ 3,406      $ 1,135      $ —        $ 202,086   

Costs and expenses:

         

Cost of revenue (exclusive of amortization)

    18,810        367        122        —          19,299   

Sales and marketing

    108,891        856        285        212  (a)      110,244   

Technology and development

    48,498        758        253        1,723  (b)      51,232   

General and administrative

    38,295        1,143        381        (253 )(c)      39,566   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    214,494        3,124        1,041        1,682        220,341   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

    (16,949     282        94        (1,682     (18,255

Other income

    385        10        3        —          398   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

    (16,564     292        97        (1,682     (17,857

Income tax benefit (expense)

    4,111        (114     (38     152  (d)      4,111   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ (12,453   $ 178      $ 59      $ (1,530   $ (13,746
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share — basic and diluted

  $ (0.35         $ (0.38

Weighted-average shares outstanding — basic and diluted (Note 6)

    36,029              36,029   

See accompanying notes to unaudited pro forma condensed combined statement of operations.

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

ZILLOW, INC. AND STREETEASY, INC.

Note 1. Description of Transaction

On August 26, 2013, Zillow, through its wholly owned subsidiary, Strawberry Acquisition, Inc., a Delaware corporation (“Strawberry Merger Sub”), consummated its acquisition of StreetEasy, pursuant to an Agreement and Plan of Merger (the “StreetEasy Merger Agreement”) by and among Zillow, StreetEasy, Strawberry Merger Sub and Shareholder Representative Services LLC, acting as the stockholder representative, dated August 16, 2013. Under the terms and subject to the conditions of the Merger Agreement, Merger Sub merged with and into StreetEasy with StreetEasy remaining as the surviving company and a wholly owned subsidiary of Zillow (the “StreetEasy Acquisition”).

Note 2. Basis of Pro Forma Presentation

The unaudited pro forma condensed combined statement of operations was prepared using the acquisition method of accounting with Zillow considered the accounting acquirer of StreetEasy. Under the acquisition method of accounting, the purchase price is allocated to the underlying StreetEasy tangible and intangible assets acquired and liabilities assumed based on their respective fair market values as of the closing date of the StreetEasy Acquisition with any excess purchase price allocated to goodwill.

The historical unaudited condensed statement of operations of StreetEasy for the six months ended June 30, 2013 was included in Exhibit 99.2 of Zillow’s Current Report on Form 8-K/A filed with the SEC on November 5, 2013, which is incorporated by reference into this joint proxy statement/prospectus. The historical unaudited condensed statement of operations for StreetEasy for the period from July 1, 2013 to August 26, 2013 are not incorporated by reference into this joint proxy statement/prospectus. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is presented as if the StreetEasy Acquisition was completed on January 1, 2013.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is not intended to represent or be indicative of the results of operations or financial position of Zillow that would have been reported had the StreetEasy Acquisition been completed as of the dates presented, and should not be taken as representative of the future results of operations of Zillow. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 does not reflect any potential operating efficiencies or cost savings that Zillow may achieve with respect to the combined operations of Zillow and StreetEasy.

Note 3. Estimated Purchase Price

The total consideration payable to StreetEasy equity holders in the StreetEasy acquisition was approximately $50 million in cash, less certain transaction expenses and as adjusted at closing based on StreetEasy’s net working capital, cash and debt. All vested options to purchase shares of StreetEasy’s common stock were cancelled and, in settlement of such cancellation, the holders of such options were entitled to receive cash payments representing a portion of the StreetEasy Acquisition consideration as described in the StreetEasy Merger Agreement. A portion of the StreetEasy Acquisition consideration has been attributed to the substitution of unvested stock options of StreetEasy outstanding as of the closing of the StreetEasy Acquisitions for stock options to purchase shares of Zillow’s Class A common stock at an exchange ratio implied by the StreetEasy Acquisition consideration as described in the StreetEasy Merger Agreement. In connection with the closing, $5.0 million of the StreetEasy Acquisition consideration otherwise payable to StreetEasy stockholders and holders of vested stock options was deposited in a third-party escrow account to secure certain indemnification obligations of those equity holders.

 

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The purchase price was approximately $48.2 million, as summarized in the following table (in thousands):

 

Cash payable for the outstanding stock of StreetEasy

   $ 42,821   

Cash payable for the cancellation of vested options to purchase shares of StreetEasy’s common stock

     2,989   

Certain transaction expenses and other costs incurred by StreetEasy

     1,924   

Substituted unvested stock options attributable to pre-combination service

     430   
  

 

 

 

Total purchase price

   $ 48,164   
  

 

 

 

Note 4. Estimated Purchase Price Allocation

The total purchase consideration has been allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the acquisition date. Based upon the fair values determined by Zillow, in which Zillow considered or relied in part upon a valuation report of a third-party expert, the total purchase price was allocated as follows (in thousands):

 

Accounts receivable

   $ 917   

Prepaid expenses and other current assets

     191   

Property and equipment

     1,138   

Other identifiable tangible assets

     144   
  

 

 

 

Total tangible assets

     2,390   
  

 

 

 

Accounts payable

     (72

Accrued expenses and other current liabilities

     (175

Accrued compensation and benefits

     (223

Other identifiable liabilities

     (174

Net deferred tax liability

     (4,111
  

 

 

 

Total liabilities

     (4,755
  

 

 

 

Net acquired liabilities

     (2,365
  

 

 

 

Identifiable intangible assets

     11,600   

Goodwill

     38,929   
  

 

 

 

Total purchase price allocation

   $ 48,164   
  

 

 

 

Identifiable intangible assets acquired consisted of the following (in thousands):

 

            Estimated
Amortization
Period
(in years)
 

Developed technology

   $ 4,500         5   

Customer relationships

     4,900         5   

Trademarks

     2,200         5   
  

 

 

    

Total intangible assets acquired

   $ 11,600      
  

 

 

    

The estimated fair value of the intangible assets acquired was determined by Zillow, and Zillow considered or relied in part upon a valuation report of a third-party expert. Zillow used a cost approach to measure the fair value of the developed technology based on the estimated cost to recreate the technology. Zillow used an income approach to measure the fair value of the customer relationships based on the excess earnings method, whereby the fair value is estimated based upon the present value of cash flows that the applicable asset is expected to

 

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generate. Zillow used an income approach to measure the fair value of the trademarks based on the relief-from-royalty method. These fair value measurements were based on Level 3 measurements under the fair value hierarchy. Net tangible assets were valued at their respective carrying amounts, as Zillow believes that these amounts approximate their current fair values.

Note 5. Pro Forma Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013:

(a) To record share-based compensation expense related to unvested stock options substituted. The pro forma adjustment for unvested stock options substituted represents the difference between StreetEasy’s historical share-based compensation expense and the estimated share-based compensation expense as if the StreetEasy Acquisition was completed as of January 1, 2013.

(b) To record the following adjustments to technology and development expense (in thousands):

 

To record amortization expense related to intangible assets acquired*

   $ 1,547   

To record share-based compensation expense related to unvested stock options substituted**

     176   
  

 

 

 

Total adjustments to technology and development expense

   $ 1,723   
  

 

 

 

 

* Pro forma amortization expense is calculated herein using the straight-line method.
** See (a) above.

(c) To record the following adjustments to general and administrative expense (in thousands):

 

To eliminate acquisition-related costs

   $ (376

To record share-based compensation expense related to unvested stock options substituted*

     123   
  

 

 

 

Total adjustments to general and administrative expense

   $ (253
  

 

 

 

 

*See (a) above.

(d) To eliminate StreetEasy’s income tax expense, as Zillow has generated historical pretax losses resulting in no income tax expense for Zillow.

Note 6. Pro Forma Net Loss per Share

The basic and diluted pro forma net loss per share is based on the weighted average number of shares of Zillow Class A common stock outstanding and adjusted, as applicable, for the estimated common stock dilution under the treasury stock method for the StreetEasy stock options substituted.

For the year ended December 31, 2013, the following Zillow Class A common stock equivalents were excluded from the computation of diluted pro forma net loss per share because their effects would have been antidilutive, including 25,385 shares underlying substituted stock option issued in connection with the StreetEasy Acquisition (in thousands):

 

Zillow Class A common stock issuable upon the exercise of stock options

     3,204   

Zillow Class A common stock underlying Zillow’s unvested restricted stock awards

     171   
  

 

 

 

Total Zillow Class A common stock equivalents

     3,375   
  

 

 

 

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

TRULIA, INC. AND MARKET LEADER, INC.

Introduction to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2013

The following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is based upon the historical consolidated financial data of Trulia and Market Leader, Inc. (“Market Leader”) after giving effect to Trulia’s acquisition of Market Leader (the “Market Leader Acquisition”) using the acquisition method of accounting, and after applying the assumptions, reclassifications and adjustments described in the accompanying notes based on current intentions and expectations relating to the combined business of Trulia and Market Leader.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is presented as if the Market Leader Acquisition was completed on January 1, 2013. The historical consolidated financial data has been adjusted in the unaudited pro forma condensed combined financial data to give effect to events that are (1) directly attributable to the Market Leader Acquisition, (2) factually supportable, and (3) with respect to the unaudited pro forma statement of operations, expected to have a continuing impact on the consolidated results of Trulia following the Market Leader Acquisition. The unaudited pro forma condensed combined statement of operations should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined statement of operations. In addition, the unaudited pro forma condensed combined financial information was based on and should be read in conjunction with the separate audited historical financial statements of Trulia as of and for the year ended December 31, 2013, and the related notes, included in Trulia’s Annual Report on Form 10-K/A for the year ended December 31, 2013, filed with the SEC on May 23, 2014, and incorporated by reference into this joint proxy statement/prospectus.

The unaudited pro forma condensed combined statement of operations has been presented for informational purposes only. The pro forma information is not necessarily indicative of what Trulia’s and Market Leader’s combined results of operations actually would have been had the Market Leader Acquisition been completed as of the date indicated. In addition, the unaudited pro forma condensed combined statement of operations does not purport to project the future combined operating results of the Trulia and Market Leader.

Pursuant to the acquisition method of accounting, the purchase price, calculated as described in Note 3 to the unaudited pro forma condensed combined statement of operations, has been allocated to assets acquired and liabilities assumed based on their respective fair values. The pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined statement of operations.

The unaudited pro forma condensed combined statement of operations does not reflect any revenue enhancements or operating synergies that Trulia may achieve as a result of the Market Leader Acquisition or the costs to integrate the operations of Trulia and Market Leader or the costs necessary to achieve these revenue enhancements and operating synergies. There were no significant intercompany transactions between Trulia and Market Leader for the period covered by this unaudited pro forma condensed combined statement of operations.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2013

(in thousands, except per share data)

 

    Historical     Pro Forma
Adjustments
(Note 5)
    Pro Forma
Combined
 
    Trulia
Year Ended
 December 31, 2013 
    Market Leader
January 1, 2013 to
August 20, 2013
     

Revenue

  $ 143,728      $ 34,423      $ —       $ 178,151   

Costs and operating expenses:

       

Cost of revenue (exclusive of amortization of product development costs)

    23,122        —         11,016  (a)(b)      34,138   

Technology and development

    34,612        7,777        5,194  (a)(b)      47,583   

Sales and marketing

    71,370        21,915        170  (a)(b)      93,455   

General and administrative

    32,702        7,490        3,031  (a)(b)      43,223   

Acquisition related costs

    6,065        7,685        (13,750 )(d)      —    

Depreciation of property and equipment

    —         2,075        (2,075 )(b)      —    

Amortization of acquired intangible assets

    —         2,016        (2,016 )(b)      —    
 

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and operating expenses

    167,871        48,958        1,570        218,399   
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (24,143     (14,535     (1,570     (40,248

Interest income

    121        11        —         132   

Interest expense

    (1,107     —         —         (1,107

Loss on debt extinguishment

    (141     —         —         (141
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

    (25,270     (14,524     (1,570     (41,364

Income tax benefit (expense)

    7,511        (15     —          7,496   
 

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before nonrecurring charges or credits directly attributable to the transaction

  $ (17,759   $ (14,539   $ (1,570   $ (33,868
 

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common stockholders — basic and diluted

  $ (0.54       $ (0.94

Weighted-average shares used in computing net loss per share attributable to common stockholders — basic and diluted

    33,130          2,792  (c)      35,922   

See accompanying notes to unaudited pro forma condensed combined statement of operations.

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

TRULIA, INC. AND MARKET LEADER, INC.

Note 1. Description of Transaction

On May 7, 2013, Trulia entered into an Agreement and Plan of Merger (the “Market Leader Merger Agreement”) with Market Leader, and a wholly owned subsidiary of Trulia. Market Leader is a provider of software-as-a-service based customer relationship management software for the real estate sector. On August 20, 2013 (the “Acquisition Closing”), a wholly owned subsidiary of Trulia merged with and into Market Leader, and Market Leader continued as the surviving entity and a wholly owned subsidiary of Trulia (the “Market Leader Acquisition”).

At the Acquisition Closing, Trulia acquired all the outstanding shares of capital stock of Market Leader for 4,412,489 shares of Trulia common stock and $170.5 million in cash. Under the terms and conditions of the Market Leader Merger Agreement, each outstanding share of Market Leader common stock was converted into the right to receive (a) $6.00 in cash, without interest, and subject to applicable withholding tax, and (b) 0.1553 of a share of Trulia common stock, for a total purchase price of $372.7 million. In connection with the merger, all of the outstanding stock options, stock appreciation rights and restricted stock units of Market Leader were converted into stock options, stock appreciation rights and restricted stock units, respectively, denominated in shares of Trulia common stock.

The terms of each assumed equity award were the same except that the number of shares subject to each equity award and the per share exercise price, if any, were adjusted by an exchange ratio formula set forth in the Market Leader Merger Agreement. Additionally, Trulia elected to assume the remaining share reserve under Market Leader’s existing 2004 Equity Incentive Plan at the time of the Acquisition Closing.

Note 2. Basis of Pro Forma Presentation

The Market Leader Acquisition was accounted for in accordance with the acquisition method of accounting for business combinations with Trulia as the accounting acquirer. The unaudited pro forma condensed combined statement of operations was based on the historical consolidated financial statements of Trulia and Market Leader after giving effect to the cash paid and the stock issued by Trulia to consummate the Market Leader Acquisition, as well as certain reclassifications and pro forma adjustments. In accordance with the acquisition method of accounting for business combinations, the assets acquired and the liabilities assumed were recorded as of the completion of the Market Leader Acquisition, at their respective fair values, and added to those of Trulia. The excess purchase consideration over the fair values of assets acquired and liabilities assumed was recorded as goodwill.

The accounting standards define the term “fair value” and set forth the valuation requirements for any asset or liability measured at fair value, and specifies a hierarchy of valuation techniques based on the inputs used to develop the fair value measures. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurements date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result, Trulia may have recorded assets which are not intended to be used or sold and/or have valued assets at fair value measures that do not reflect Trulia’s intended use of those assets. Many of these fair value measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under the acquisition method, acquisition-related transaction costs (e.g. advisory, legal, valuation and other professional fees) are not included as consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. These costs are not presented in the unaudited pro forma combined consolidated

 

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statement of operations because they will not have a continuing impact on the combined results. Total acquisition-related costs for Trulia and Market Leader were $6.1 million and $7.7 million, respectively.

The accompanying unaudited pro forma condensed combined statement of operations is presented for illustrative purposes only and does not reflect the costs of any integration activities or benefits that may result from realization of revenue enhancements or operating synergies expected to result from the Market Leader Acquisition.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013 is presented as if the Market Leader Acquisition was completed on January 1, 2013.

Upon review of Market Leader accounting policies, Trulia is not aware of any differences that would have a material impact on the combined statement of operations. The unaudited pro forma condensed combined statement of operations does not assume any differences in accounting policies. However, certain allocations and reclassifications were made to Market Leader balances to conform to Trulia’s financial statement presentation, as described in the accompanying notes.

Note 3. Consideration Transferred

The following is the consideration transferred to effect the Market Leader Acquisition (in thousands):

 

Purchase consideration:

  

Cash

   $ 170,497   

Fair value of 4,412,489 shares common stock transferred as consideration

     189,296   

Fair value of awards assumed by Trulia

     12,871   
  

 

 

 

Total purchase price

     372,664   
  

 

 

 

Portion of assumed stock options, restricted stock units, and stock appreciation rights that are unearned or otherwise subject to future service requirements and therefore will be expensed in the financial statements prospectively rather than included in the purchase accounting

     13,860   
  

 

 

 

Total purchase consideration

   $ 386,524   
  

 

 

 

Note 4. Estimated Purchase Price Allocation

The following is the summary of the assets acquired and the liabilities assumed by Trulia in the Market Leader Acquisition, reconciled to the purchase price transferred (in thousands):

 

Cash and cash equivalents

   $ 9,662   

Short-term investments

     2,999   

Other identifiable tangible assets

     3,732   
  

 

 

 

Total tangible assets

     16,393   
  

 

 

 

Accounts payable

     (7,058

Accrued expenses and other current liabilities

     (3,104

Accrued compensation and benefits

     (2,253

Other identifiable liabilities

     (8,163
  

 

 

 

Total liabilities

     (20,578
  

 

 

 

Net acquired tangible assets

     (4,185
  

 

 

 

Identifiable intangible assets (i)

     123,100   

Goodwill (ii)

     253,749   
  

 

 

 

Total purchase price allocation

   $ 372,664   
  

 

 

 

 

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(i) As of the effective date of the Market Leader Acquisition, identifiable intangible assets are required to be measured at fair value and these acquired assets could include assets that are not intended to be used or sold or that are intended to be used in a manner other than their highest and best use. For purposes of this unaudited pro forma condensed combined statement of operations, it is assumed that all assets will be used in a manner that represents the highest and best use of those assets. The estimated useful lives and fair values of the identifiable intangible assets are as follows:

 

     Estimated
Useful Life
(in years)
     Fair value
(in thousands)
 

Enterprise relationship

     10       $ 29,000   

Premium Users

     5         15,200   

Existing technology

     7         32,300   

Trade Names

     10         42,900   

Home/MLS data feeds

     10         3,700   
     

 

 

 
      $ 123,100   
     

 

 

 

 

(ii) Goodwill is calculated as the difference between the fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. Goodwill is not amortized.

Note 5. Pro Forma Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2013:

 

(a) To record amortization expense of the intangible assets acquired, eliminate amortization expense of Market Leader’s historical intangible assets, and record stock compensation expense for the assumed unvested stock-based awards that is to be recorded prospectively over the remaining weighted average service period of the awards of approximately 1.18 years (see Note 4), (in thousands):

 

Record amortization expense of the acquired intangibles:

  

Cost of revenue

   $ —     

Technology and development

     2,902   

Sales and marketing

     4,075   

General and administrative

     2,711   

Eliminate amortization expense of historical intangibles:

  

Cost of revenue

     —     

Technology and development

     (605

Sales and marketing

     (847

General and administrative

     (564

Record amortization of the fair value portion of the assumed stock-based awards that is to be recorded prospectively:

  

Cost of revenue

     1,315   

Technology and development

     1,413   

Sales and marketing

     4,141   

General and administrative

     779   

 

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(b) To reclassify certain Market Leader marketing and technology costs, such as credit card fees, affiliate commissions, website hosting fees, lead generation expenses, media advertising, customer service and training costs, as cost of revenue; and reclassify internally developed software amortization as technology expense, to conform with Trulia’s presentation. Additionally, to reallocate certain corporate level costs, such as facilities rent, IT helpdesk and depreciation and amortization, in accordance with Trulia’s overhead allocation methodology. The following is the impact on each account from these reclassifications (in thousands):

 

Reclassification adjustments:

  

Cost of revenue

   $ 10,612   

Technology and development

     977   

Sales and marketing

     (9,956

Depreciation

     (1,633

Re-allocation adjustment:

  

Cost of Revenue

     (911

Technology and development

     507   

Sales and marketing

     2,757   

General and administrative

     105   

Depreciation

     (442

Amortization

     (2,016

 

(c) Relates to the number of additional shares of common stock issued in relation to the Market Leader Acquisition, assuming for the purposes of these condensed combined pro forma statement of operations that the Market Leader Acquisition closing date was January 1, 2013.

 

(d) To eliminate Market Leader’s and Trulia’s transaction costs of $6.1 million and $7.7 million, respectively, incurred and recorded in the year ended December 31, 2013.

 

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CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus may include forward-looking statements, both with respect to Zillow, Trulia, and their respective industries, that reflect Zillow’s and Trulia’s current views with respect to future events and financial performance. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” “may,” “would,” and similar statements of a future or forward-looking nature may be used to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, forward-looking statements include projections of earnings, revenues, synergies, accretion or other financial items; any statements of the plans, strategies, and objectives of management for future operations, including the execution of integration and restructuring plans and the anticipated timing of filings and approvals related to the mergers or the closing of the mergers; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond our control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in those statements, and therefore, you should not place undue reliance on any of those statements. In particular, you should consider the risks and uncertainties described under “Risk Factors.” The following factors, among others, could also cause actual results to differ from those set forth in the forward-looking statements:

 

    The ability of the combined companies to innovate;

 

    The ability of the combined companies to realize opportunities of scale;

 

    The migration of advertising dollars in the real estate sector to online and mobile;

 

    The growth rate of the combined companies;

 

    Zillow and Trulia’s ability to deliver greater return on investment to their advertisers;

 

    Uncertainty as to whether the mergers will be completed on the terms set forth in the merger agreement;

 

    The ability to obtain governmental approvals of the mergers;

 

    Failure to receive the approval of Zillow shareholders or Trulia stockholders for the mergers and other proposals included in this joint proxy statement/prospectus;

 

    Uncertainty as to whether the businesses will be combined successfully or in a timely and cost-efficient manner;

 

    Uncertainty as to the long-term value of Holdco common stock;

 

    The risk that expected cost savings or other synergies from the transaction may not be fully realized or may take longer to realize than expected; and

 

    The risk that business disruption relating to the mergers may be greater than expected.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors set forth in this joint proxy statement/prospectus and the risk factors included in Zillow’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, the risk factors included in Trulia’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, and the risk factors set forth in the other documents of Zillow, Holdco, and Trulia on file with the SEC. Any forward-looking statements made in this material are qualified in their entirety by the cautionary statements contained or referred to in this section, and there is no assurance that the actual results or developments anticipated by Zillow, Trulia, or Holdco will be realized or that, even if substantially realized, they will have the expected consequences to, or effects on, their respective businesses or operations. Except to the extent required by applicable law, none of Zillow, Trulia, and Holdco undertakes any obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

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INFORMATION ABOUT THE COMPANIES

Zillow, Inc.

Zillow, Inc. was incorporated as a Washington corporation effective December 13, 2004, and launched the initial version of its website, Zillow.com, in February 2006. Zillow operates the leading real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and products to help people find vital information about homes and connect with local professionals. Zillow’s principal executive offices are located at 1301 Second Avenue, Floor 31, Seattle, Washington 98101, and its telephone number is (206) 470-7000. Zillow’s website address is www.zillow.com. In addition, Zillow maintains a Facebook page at www.facebook.com/zillow and a twitter feed at www.twitter.com/zillow. Information contained on, or that can be accessed through, Zillow’s website, Facebook page or twitter feed does not constitute part of this joint proxy statement/prospectus and inclusions of its website address, Facebook page address, and twitter feed address in this joint proxy statement/prospectus are inactive textual references only.

Trulia, Inc.

Trulia, Inc. was incorporated as a Delaware corporation effective June 1, 2005 as Realwide, Inc. On September 22, 2005, it changed its name to Trulia, Inc. Trulia’s online marketplace and mobile applications help consumers research homes and neighborhoods and provide a broad array of information to help them in the buying and selling processes. Trulia also helps real estate professionals market themselves and their listings. Trulia’s subscription-based real estate marketing and software products provide real estate professionals with access to transaction-ready consumers and help them grow and manage their businesses. Trulia’s principal executive offices are located at 535 Mission Street, Suite 700, San Francisco, California 94105, and its telephone number is (415) 648-4358. Trulia’s website address is www.trulia.com. Information contained on, or that can be accessed through, Trulia’s website does not constitute part of this joint proxy statement/prospectus and inclusion of Trulia’s website address in this joint proxy statement/prospectus is an inactive textual reference only.

Zebra Holdco, Inc.

Zebra Holdco, Inc. was incorporated as a Washington corporation effective July 25, 2014, solely for the purpose of effecting the mergers. As described in “The Mergers” and “The Merger Agreement,” following the completion of the mergers, Zillow and Trulia will each become a wholly owned subsidiary of Holdco. Holdco intends to apply to list its Class A common stock on NASDAQ under the symbol “Z,” subject to official notice of issuance. Holdco’s principal executive offices are located at 1301 Second Avenue, Floor 31, Seattle, Washington 98101, and its telephone number is (206) 470-7000.

THE ZILLOW SPECIAL MEETING

This section contains information about the special meeting of Zillow shareholders that has been called to consider and approve the merger agreement, to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, and to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

This joint proxy statement/prospectus is being furnished to the Zillow shareholders in connection with the solicitation of proxies by the Zillow board for use at the Zillow special meeting. Zillow is first mailing this joint proxy statement/prospectus and accompanying proxy card to its shareholders on or about November 19, 2014.

 

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Date, Time and Place

The Zillow special meeting will be held at the offices of Perkins Coie LLP, 1201 Third Avenue, 48th Floor, Seattle, Washington 98101 on December 18, 2014, at 8:00 a.m. Pacific time, unless the Zillow special meeting is adjourned or postponed.

Purpose

At the Zillow special meeting, Zillow shareholders will be asked to consider and vote upon the following matters:

 

    a proposal to approve the merger agreement — THE MERGERS WILL ONLY OCCUR IF PROPOSAL NO. 2 IS ALSO APPROVED;

 

    a proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    a proposal to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

Recommendation of the Zillow Board

The Zillow board unanimously (1) adopted the merger agreement and approved the transactions contemplated by the merger agreement, upon the terms and subject to the conditions set forth in the merger agreement, (2) determined that the mergers are fair to, and in the best interests of, Zillow and its shareholders, (3) authorized management to take such actions as are necessary or advisable to effect the transactions contemplated by the merger agreement, including submitting the merger agreement to the Zillow shareholders for approval at the Zillow special meeting, and (4) recommended that Zillow shareholders approve the merger agreement.

The Zillow board unanimously recommends that Zillow shareholders vote:

 

    “FOR” the proposal to approve the merger agreement;

 

    “FOR” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation; and

 

    “FOR” the proposal to approve the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation.

See “The Mergers — Recommendation of the Zillow Board; Zillow’s Reasons for the Merger.”

Zillow shareholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the merger agreement, the mergers and the other transactions contemplated by the merger agreement. In addition, Zillow shareholders are directed to the merger agreement, which is attached as Annex A to this joint proxy statement/prospectus.

Record Date; Shares Entitled to Vote

Only holders of record of shares of Zillow common stock at the close of business on the Zillow record date of November 5, 2014, will be entitled to vote at the Zillow special meeting. Each outstanding share of Zillow Class A common stock entitles its holder to cast one vote, and each outstanding share of Zillow Class B common

 

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stock entitles its holder to cast ten votes. As of the Zillow record date, there were 34,446,019 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock outstanding and entitled to vote at the Zillow special meeting.

Quorum; Abstentions and Broker Non-Votes

A quorum is the minimum number of shares required to be present at the Zillow special meeting for the meeting to be properly held under Zillow’s amended and restated bylaws and Washington law. The presence, in person or by proxy, of holders of a majority of the total votes entitled to be cast at the Zillow special meeting will constitute a quorum at the meeting. In the absence of a quorum, a majority of the votes represented at the Zillow special meeting, present in person or by proxy, will have the power to adjourn the Zillow special meeting.

Holders of shares of Zillow common stock present in person at the Zillow special meeting but not voting and shares of Zillow common stock for which Zillow has received proxies indicating that their holders have abstained will be counted as present at the Zillow special meeting for purposes of determining whether a quorum is established.

Under the rules that govern brokers who have record ownership of shares that are held in “street name” for their clients, the beneficial owners of the shares, brokers have discretion to vote these shares on routine matters but not on non-routine matters. The approval of the merger agreement, the approval of authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, and the approval of the adjournment of the Zillow special meeting if necessary or desirable to solicit additional proxies to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation are not considered routine matters. Accordingly, brokers will not have discretionary voting authority to vote on these matters at the Zillow special meeting. A broker non-vote occurs when brokers do not have discretionary voting authority and have not received instructions from the beneficial owners of the shares on a particular non-routine matter. A broker will not be permitted to vote on the proposal to approve the merger agreement, the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, and the proposal to adjourn the Zillow special meeting to solicit additional proxies without instruction from the beneficial owner of the shares of Zillow common stock held by that broker. Shares of Zillow common stock beneficially owned that have been designated on proxy cards by the broker, bank or nominee as not voted on the proposals (broker non-votes) will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement, but will have no effect on the other proposals.

Vote Required

Approval of the merger agreement requires the affirmative vote of the holders of at least a majority of the voting power of the shares of Zillow Class A common stock and Zillow Class B common stock outstanding as of the Zillow record date and entitled to vote thereon, voting together as a single voting group. Accordingly, a Zillow shareholder’s failure to submit a proxy card or to vote in person at the Zillow special meeting, an abstention from voting, or the failure of a Zillow shareholder who holds his, her or its shares in “street name” through a broker, bank, or other nominee to give voting instructions to such broker, bank, or other nominee, will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.

Approval of the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires that the number of votes cast “FOR” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group, exceeds the number of votes cast “AGAINST” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group. Accordingly, abstentions, broker non-votes and shares not in attendance at the Zillow special meeting will have no effect on the outcome of the vote to approve the authorization of nonvoting Class C

 

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capital stock in Holdco’s amended and restated articles of incorporation. If Proposal No. 2 to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation is not approved by Zillow shareholders, the mergers will not be completed, even if the proposal to adopt the merger agreement (Proposal No. 1) is approved.

Approval of the adjournment of the Zillow special meeting if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation requires that the number of votes cast “FOR” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as single voting group, exceeds the number of votes cast “AGAINST” the proposal by holders of shares of Zillow Class A common stock and Zillow Class B common stock present, in person or by proxy, at the Zillow special meeting and entitled to vote thereon, voting together as a single voting group. Accordingly, abstentions, broker non-votes and shares not in attendance at the Zillow special meeting will have no effect on the outcome of any vote to adjourn the Zillow special meeting.

In connection with entering into the merger agreement, Zillow’s founders, Richard Barton and Lloyd Frink, in their individual capacities, entered into the Zillow voting agreement pursuant to which they agreed to, among other things, vote their shares of Zillow common stock in favor of the merger agreement and in favor of approval of the mergers and any other transactions contemplated by the merger agreement. As of the Zillow record date, the shares of Zillow Class A common stock and Zillow Class B common stock that were subject to the Zillow voting agreement constituted approximately 64% of the voting power of Zillow common stock outstanding on that date. As a result of their beneficial ownership of more than a majority of the outstanding voting power of the shares of Zillow Class A common stock and Zillow Class B common stock, Messrs. Barton and Frink will have the power to approve each of the Zillow proposals without the affirmative vote of any other Zillow shareholder.

Voting by Zillow’s Directors and Executive Officers

As of the Zillow record date, Zillow’s directors and executive officers and certain of their affiliates beneficially owned 1,557,890 shares of Zillow Class A common stock and 6,217,447 shares of Zillow Class B common stock entitled to vote at the Zillow special meeting. This represents approximately 66% in voting power of the outstanding shares of Zillow common stock entitled to be cast at the Zillow special meeting. Richard Barton and Lloyd Frink, Zillow directors and founders who also own or control all of Zillow’s outstanding Class B common stock, have entered into a voting agreement with each other that obligates them to vote “FOR” the Zillow proposal to approve the merger agreement and the other proposals to be considered at the Zillow special meeting. Additionally, Zillow currently expects that the other Zillow directors and executive officers will vote their shares of Zillow common stock in favor of the Zillow merger agreement proposal and the other proposals to be considered at the Zillow special meeting, although none of them is obligated to do so. See “The Mergers — Interests of Officers and Directors in the Mergers” and “Voting Agreements — Zillow Voting Agreement.”

How to Vote

Zillow shareholders may vote using any of the following methods:

By telephone or on the Internet

Zillow shareholders can vote by calling the toll-free telephone number on their proxy card. Please have your proxy card handy when you call. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded.

Zillow shareholders can vote over the Internet by following the instructions on their proxy card. Please have your proxy card handy when you go online. As with telephone voting, you can confirm that your instructions have been properly recorded.

 

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Telephone and Internet voting facilities for Zillow shareholders of record will be available 24 hours a day beginning on or about November 19, 2014, and will close at 11:59 p.m. Eastern time on December 17, 2014. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. Therefore, Zillow recommends that you follow the voting instructions in the materials you receive.

By mail

Zillow shareholders may complete, sign and date the proxy card or voting instruction card mailed to them and return it in the prepaid envelope.

In person at the Zillow special meeting

Zillow shareholders as of the Zillow record date may vote in person at the Zillow special meeting. You may also be represented by another person at the Zillow special meeting by executing a proper proxy designating that person. If you are a beneficial owner of Zillow shares held in “street name,” you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspectors of election with your ballot to be able to vote at the Zillow special meeting.

Voting of Proxies

Shares will be voted in accordance with the instructions provided by a Zillow shareholder who has voted by Internet, by telephone or by completing, signing, dating, and mailing a proxy card or voting instruction card. If you are a Zillow shareholder of record and you sign, date, and return your proxy card but do not indicate how you want to vote or do not indicate that you wish to abstain, your shares will be voted “FOR” the proposal to approve the merger agreement, “FOR” the proposal to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, and “FOR” the proposal to adjourn the Zillow special meeting if necessary or appropriate to solicit additional proxies to approve the merger agreement or to approve the authorization of nonvoting Class C capital stock in Holdco’s amended and restated articles of incorporation, and in the discretion of the proxyholders on any other matter that may properly come before the meeting.

Revoking Your Proxy

Zillow shareholders of record may revoke a proxy at any time before it is exercised at the Zillow special meeting. To do this, you must:

 

    enter a new vote by telephone or over the Internet by the date and time indicated on the proxy card or voter instruction form;

 

    deliver another duly executed proxy card or voter instruction form bearing a later date to the addressee named in the proxy card or voter instruction form prior to the vote at the Zillow special meeting;

 

    provide written notice of the revocation to Zillow’s Corporate Secretary at Zillow, Inc., 1301 Second Avenue, Floor 31, Seattle, Washington 98101; or

 

    attend the Zillow special meeting and vote in person (your attendance at the meeting will not, by itself, revoke your proxy; you must vote in person at the meeting).

If your shares are held in “street name,” you must contact your broker, bank or nominee to revoke and vote your proxy. If you have questions about how to vote or revoke your proxy, you should contact Zillow’s proxy solicitor, Georgeson Inc., toll-free at (800)  868-1391.

Attending the Zillow Special Meeting

Zillow shareholders as of the Zillow record date, or their duly appointed proxies, may attend the Zillow special meeting. If you hold shares of Zillow common stock in your name as a shareholder of record and you wish to attend the Zillow special meeting, you should bring valid picture identification.

 

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If your shares of Zillow common stock are held in “street name” in a stock brokerage account or by a broker, bank, or other nominee and you wish to attend the Zillow special meeting, you need to bring a copy of a bank or brokerage statement to the Zillow special meeting reflecting your stock ownership as of the Zillow record date. You should also bring valid picture identification, such as a driver’s license. Please note that if you plan to attend the Zillow special meeting in person and would like to vote at the Zillow special meeting, you will need to bring a legal proxy from your broker, bank or other holder of record as explained above.

Adjournments and Postponements

Although it is not currently expected, the Zillow special meeting may be adjourned or postponed for the purpose of, among other things, soliciting additional proxies. Zillow may adjourn the Zillow special meeting without notice if the new date, time, and place are announced at the Zillow special meeting before adjournment and, at any subsequent reconvening of the Zillow special meeting, all proxies will be voted in the same manner as such proxies would have been voted at the original convening of the Zillow special meeting, except for any proxies that have been effectively revoked or withdrawn. Any signed proxies received by Zillow prior to the Zillow special meeting in which no voting instructions are provided on such matter will be voted “FOR” an adjournment of the special meeting, if necessary or appropriate. Any adjournment or postponement of the Zillow special meeting will allow Zillow shareholders who have already sent in their proxies to revoke them at any time prior to their use at the Zillow special meeting as adjourned or postponed.