Zillow's Surprise Secondary Stock Offering

Zillow Inc. (NASDAQ: Z) is about to raise some new capital, and it is doing so when shares are close to an all-time high.  The real estate information marketplace has announced that it will commence an underwritten public offering of 3,175,000 shares of the company’s Class A common shares. The offering is being made under an effective shelf registration. An additional 325,000 shares of Class A common stock will be sold in the offering by certain existing shareholders.

The use of funds is rather broad: “Zillow intends to use the net proceeds of the offering for general corporate purposes, which may include working capital, sales and marketing activities, general and administrative matters and capital expenditures. Zillow may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement its business, although Zillow has no present commitments or agreements to enter into any acquisitions or investments.” As is the case with almost all insider sales, Zillow will not receive any of the proceeds from the sale of shares by the selling shareholders.

Citigroup will lead the offering as bookrunning manager and representative of the underwriters and Goldman Sachs will be a joint bookrunning manager. Co-managers will be Allen & Company, Pacific Crest Securities, ThinkEquity, and Canaccord Genuity. Zillow intends to grant to the underwriters a 30-day option to purchase up to an additional 525,000 shares to cover over-allotments.

The offering from the company’s portion of shares is for more than $130 million at current market prices on a static basis, and that compares to its market cap of $1.24 billion. Zillow shares closed up 2.3% at $42.43 and its 52-week trading range is $21.22 to $44.23; shares are down by 2.4% at $41.40 in the after-hours session.

JON C. OGG