Online ad firm OLX Brazil in $642 million deal to buy competitor

OSLO (Reuters) - Online marketplace OLX Brazil has agreed to buy competitor Grupo ZAP for 2.9 billion reais ($642 million), forming a leading Brazilian player in digital real estate advertising, OLX and its European owners said.

By combining their operations, rapidly growing OLX and ZAP can slash costs and boost earnings margins while providing a broader range of services to the online real estate market, they added late on Tuesday.

The all-cash transaction, which requires approval from Brazil's competition watchdog, will be equally funded by OLX's owners, Norway's Adevinta ASA ADEB.OL and Dutch-listed Prosus NV PRX.AS, the companies said in a joint statement.

While Brazil’s real estate market is large, the use of online listings to buy and sell property is still in its infancy, said Chief Executive Rolv Erik Ryssdal of Oslo-listed Adevinta.

“Expanding in territories where we see significant growth opportunities is a key pillar of Adevinta’s strategy,” Ryssdal said.

“I am delighted to see OLX Brazil strengthening its position ... in order to capture part of the upcoming growth potential,” he added.

The deal, if approved by Brazil’s CADE antitrust agency, is expected to close in the second half of 2020.

Adevinta is majority owned by Norway's Schibsted ASA SBSTA.OL, while Prosus is controlled by South Africa's Naspers Ltd NPNJn.J.

Reporting by Terje Solsvik; Editing by Clarence Fernandez