(Dealbook) The Latin American e-commerce giant MercadoLibre has acquired VMK, a holding company that owns two major real estate websites, the companies are expected to announce on Wednesday.
MercadoLibre, based in Buenos Aires and traded on the Nasdaq, will pay about US$40m in a cash transaction for 100 percent control of VMK, MercadoLibre’s chief executive, Marcos Galperin, told DealBook. About $5 million of that depends on the company meeting certain milestones, said Mr. Galperin, who was visiting São Paulo this week.
MercadoLibre, often referred to as the eBay of Latin America, is seeking to maintain its dominant position in e-commerce in the region against a flurry of younger and more specialized companies. The deal will give the company control of two well-established sites: portalinmobiliario.com in Chile and Guiadinmuebles.com in Mexico.
Cristián Maturana, the current general manager of both real estate websites and a VMK co-founder, will continue to be in charge of the sites along with his partners.
The companies have known each other for years. VMK dates to the 1990s, before the first Internet boom. The Chilean site has been active in Chile since 2000, Mr. Maturana said, and expanded to Mexico in 2010.
The deal shows the growing importance of the online real estate market for MercadoLibre, which has a market capitalization of about $ 3.9 billion.
On Wednesday morning, MercadoLibre’s stock was trading at around $88 a share, near its 52-week low of $83.53. Its high during that period was $145.99 a share.
Mr. Galperin said the company was looking to expand vertically “in categories that require distinct price models, distinct types of navigation and special adaptations.” Real estate, where the company has made inroads in recent years, is a top target for expansion, he said.
The negotiations for the deal took many months, said Mr. Maturana, who was initially looking for a strategic partner to help VMK expand in Latin America. But he said he realized that any potential partner wanted control, so VMK agreed to sell the entire company.