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RentPath Nixes CoStar's $588M Acquisition Amid FTC Scrutiny


RentPath Holdings has terminated its $588M deal to be acquired by CoStar Group after federal officials scrutinized and later sued to block the merger between the real estate data sites.

The deal, agreed to in February, was held up by the Federal Trade Commission, which asked in April for more details from the companies and then filed a complaint in November to block the move. RentPath, which filed for Chapter 11 bankruptcy in February, said in a statement Tuesday its traffic has grown in the second half of 2020 and it has the backing of “well-known” asset management firms.

“We have a range of high growth products that complement our core apartment search websites, and we are excited to emerge from restructuring and continue to build on this foundation,” RentPath CEO Dhiren Fonseca said in a statement.

The company is on an upward trajectory despite challenges brought on in 2020, according to a public statement by an adviser to RentPath's lenders. Representatives for CoStar and RentPath did not immediately respond to requests for comment from Bisnow.

RentPath owns and, while CoStar operates, and The FTC claimed last month in a 15-page lawsuit the proposed merger would further concentrate online listings for apartments in 49 major U.S. metro markets.

“[CoStar and RentPath's] aggressive, head-to-head competition has kept advertising rates low while offering consumers a convenient, data-rich tool for finding an apartment,” FTC Bureau of Competition Deputy Director Daniel Francis said in a statement in November. “This acquisition will eliminate price and quality competition that benefits both renters and property managers.”

The lawsuit surrounding the acquisition had not been updated as of Wednesday morning, and the last filing was a Dec. 23 scheduling order by a federal judge for case deadlines. An FTC representative was unavailable for comment Wednesday morning.

CoStar spent at least $7.5M in the failed deal, paying that amount in July to extend the deal’s termination option as the companies awaited FTC review, according to Securities and Exchange Commission filings. CoStar also paid a $59M break free into a cash escrow account under the asset purchase agreement, the firm said in its most recent earnings report. That amount is not refundable to CoStar “under specified circumstances and either certain antitrust approvals are not obtained or a governmental order related to antitrust or competition matters prohibits the consummation of the transaction,” the earnings report said. Bisnow has not learned as of press time if the FTC's investigation is sufficient to activate that clause.

In CoStar’s third-quarter earnings report in October, the company said it was still awaiting regulatory approval for the deal. While waiting on RentPath, CoStar purchased the real estate auction platform Ten-X for $190M in June. Earlier this month, the real estate giant also received rapid FTC approval for its November acquisition of Homesnap Inc., another real estate listing tech company.

D.C.-based CoStar has attracted FTC scrutiny before as it has grown its network of apartment listing platforms in the past decade. The company acquired, and ForRent between 2014 and 2017 and bought the online student housing marketplace Off Campus Partners in 2019.

The FTC eight years ago stepped into CoStar’s $860M acquisition of competitor LoopNet, forcing LoopNet to spin off its commercial real estate data arm Xceligent to counter CoStar’s market dominance. Xceligent was out of business five years later after waging court battles including an image use lawsuit by CoStar and antitrust countersuit from Xceligent.

CoStar won a $500M ruling in the copyright infringement suit and reached a settlement for $10.75M with Xceligent’s insurers.