Digital twin platform Matterport has agreed to be acquired by one of its customers, Costar, in a cash-and-stock deal of $5.50 per share, valuing the company at approximately $1.6 billion. Matterport’s technology helps companies create digital replicas of physical spaces, a service that has gained significant traction in the real estate industry. Costar’s offer represents a premium of 212% over Matterport’s last closing share price before the deal was announced on April 22. The deal appears to be a positive development for Matterport, whose shares had been trading below the $5 mark since August 2022 amid concerns about subscriber growth and the impact of a sluggish real estate market. Matterport’s stock was trading below $2 per share before the transaction was disclosed. The company has been working to improve its profitability over the past year, according to its 2023 financial statements. However, investors have been skeptical of the company since it went public via a SPAC deal in 2021, which Bloomberg reported valued Matterport at around $2.9 billion. Matterport’s shares were trading at $4.76 before the bell on Tuesday, slightly below the $5.50 deal price. This suggests that investors may be cautious about the deal getting blocked by regulators or may be hedging their bets due to the share-based component of the transaction. Costar’s shares, on the other hand, have risen slightly since the announcement, indicating that its investors are optimistic about the potential benefits of the deal. Matterport has experienced rapid growth since its inception in 2011, initially developing 3D imaging cameras and later joining Y Combinator’s Winter 2012 batch. Its services gained significant traction in the real estate space, despite competition from alternatives such as Cupix, Giraffe360, and Zillow 3D Home. The company’s early-mover advantage, combined with its decision to diversify into smartphone-based virtual tours and integrate AI through its Cortex solution, has contributed to its success. Matterport’s leadership has changed over the years, with its current CEO, former eBay chief product officer RJ Pittman, taking the reins in 2018. The company has raised a total of $409 million in funding over its first decade, followed by its public debut in 2021. Costar, with a market cap of $34.84 billion, is a real estate heavyweight that operates marketplaces such as Apartments.com, Homes.com, and LoopNet. This gives it direct insights into the value that Matterport’s technology can offer to its end users. According to a press release from March 2024, Costar reported over 7.4 million views of Matterport 3D Tours on Apartments.com, with consumers spending 20% more time viewing an apartment listing when Matterports were available. The company plans to integrate Matterport’s virtual tours into Homes.com. Costar’s founder and CEO, Andy Florance, stated that allowing home buyers to view properties with their own furniture, for instance, will enable agents to provide more value and promote their brands. It will be interesting to observe how Matterport’s activities beyond real estate, such as its partnership with Facebook to help researchers train robots in virtual environments, will evolve in the future. The deal is subject to regulatory approvals, but it is worth noting that in 2020, Costar’s attempt to acquire RentPath was derailed by an FTC antitrust lawsuit, and RentPath was subsequently bought by Redfin in 2021.
Costar Acquires Matterport for $5.50 per Share, Cementing Real Estate Digitalization
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