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Mortgage lender Rocket Cos. has agreed to acquire online real estate brokerage Redfin in an all-stock deal valued at $1.75 billion.
The transaction, announced Monday, gives one of the nation’s largest mortgage lenders an in-house network of more than 2,000 real estate agents across 42 states and Redfin’s popular home and rental housing listings platform, which draws nearly 50 million monthly visitors.
The deal values Redfin at $12.50 per share. Shares in Seattle-based Redfin soared 68.5% in morning trading to $9.81 per share, while shares in Detroit-based Rocket Cos. slumped 15%.
Detroit-based Rocket expects the acquisition will save the company $140 million in costs by eliminating duplicative operations and other expenses. Rocket also anticipates the move will boost revenue by more than $60 million by enabling the company to connect its clients with Redfin’s agents and, ultimately, offering those customers other real estate services that Rocket provides, including title insurance and loan servicing.
Redfin CEO Glenn Kelman is expected to remain at the helm of the real estate brokerage, reporting to Rocket’s CEO, the companies said.
Under the terms of the deal, each share of Redfin common stock will be exchanged for a fixed ratio of 0.7926 shares of Rocket Cos. Class A common stock, which represents a premium of 63% over the volume weighted average price of Redfin’s common stock for the 30 days ended March 7.
Once finalized, current Rocket Cos. shareholders will own roughly 95% of the combined company on a fully diluted basis, while Redfin shareholders will own about 5%, the companies said.
The companies’ board of directors have already approved the transaction, though Redfin shareholders still have to sign off on the sale. The companies expect the transaction to close in the second or third quarter this year.
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