FTC Lawsuit Prompts RentPath To End Acquisition By CoStar

RentPath won’t be acquired by CoStar Group, choosing to terminate the agreement, a press release stated, after the Federal Trade Commission (FTC) decided to sue to block the deal.

The FTC filed the suit because it said RentPath presented a competitive alternative to CoStar, which the proposed merger would have eliminated, the release stated, “to the detriment of customers.”

RentPath said the “termination of the agreement is in the best interests of its customers, employees and all of its stakeholders,” according to the release.

RentPath CEO Dhiren Fonseca said in the release that the company “provides tremendous value to our customers across the multifamily industry.”

“In fact, our value proposition has never been better than it is today,” Fonseca said, according to the release. “Our traffic and leads have never been higher, and they continue to grow rapidly — traffic growth in the second half of 2020 has exceeded 40 percent year over year for the RentPath network. 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.”

Stephen Spencer, managing director at Houlihan Lokey, who advises RentPath’s lenders, said in the release that the market for real estate technology businesses is “very strong” based on how recent mergers have been going.

“RentPath has developed and positioned its products to occupy a fundamentally critical point in the residential rental value chain,” he said, according to the release. “RentPath has unique assets and extensive relationships, which recent activity has shown will realize full value in the market.”

FTC Chair Joe Simons warned earlier this year that antitrust enforcers should watch out for larger companies buying competitive startups, PYMNTS reported. The issue was mostly centered around companies like Facebook, which was known for years for buying rivals in its general space, such as WhatsApp and Instagram. But speaking generally, Simons said a bigger company could effectively neutralize a surging competitor by buying it up.