UPDATE 1-CoStar Group to buy LoopNet for $860 mln

* CoStar to pay in cash and stock

* Deal at 31 pct premium to LoopNet's Tuesday close

* LoopNet shareholders to get $16.50 in cash, 0.03702 CoStar shares

* LoopNet shares up 26 pct; CoStar shares down 2 pct (Follows alerts)

April 27 (Reuters) - CoStar Group Inc , an information service provider to REITs, agreed to buy LoopNet Inc for about $860 million in cash and stock, to double its paid subscriber base.

LoopNet is a commercial real estate information services provider and operates LoopNet.com, which is a commercial real estate listing service with over 4 million members.

The deal was at a premium of 31 percent to LoopNet's Tuesday closing price of $14.31.

LoopNet shareholders will get $16.50 in cash and 0.03702 shares of CoStar common stock for each share held, the companies said in a joint statement.

CoStar expects the deal to add to adjusted net income in 2012.

CoStar said it will fund the deal with a $415 million term loan from J.P. Morgan and a $50 million revolving credit facility.

LoopNet shares were up $3.70 at $14.37, while those of CoStar were down $1.13 at $60.25 on Wednesday on Nasdaq. (Reporting by Supantha Mukherjee in Bangalore;Editing by Vyas Mohan)