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Zillow will acquire Trulia in a $3.5 billion stock deal, the companies announced Monday.

The deal, approved by both companies' boards, is expected to close next year.

The real estate brands will continue to operate under their individual names. Trulia CEO Pete Flint will maintain his position and report to Zillow CEO Spencer Rascoff.

Trulia shareholders will receive 0.444 shares of Class A Common Stock of Zillow for every Trulia share they own. Trulia shareholders will own about a third of the combined company. The value of the deal is a 25% premium on Trulia's Friday closing price of $56.35.

This is a tremendous opportunity to combine our resources and achieve even more impressive innovation that will benefit consumers and the real estate industry, Rascoff said in a release.

Zillow co-founders Richard Barton and Lloyd Frink control a majority of the company's shareholder voting power through their ownership of Zillow Class B shares, which carry 10 votes per share. They will vote their shares in favor of the combination, according to the merger announcement.

The companies expressed hope that the merger will provide better opportunities for leveraging ad sales, the primary source of revenue for both companies. According to a release, the combined revenue of both companies represents less than 4% of the estimated $12 billion real estate professionals spend on marketing.

Now the two companies will be able to go to our advertisers with one platform, Rascoff said in a call with analysts.

The companies' stock prices jumped last week on rumors that a deal was imminent. Zillow closed Friday at $158.86 a share.

Zillow shares are down more than 3% in early trading to $153.74, while Trulia stock is up more than 13% to $63.99 a share.

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