Rocket Cos. to Acquire Redfin in $1.75 Billion All-Stock Deal

Rocket Cos. has announced an all-stock acquisition of online real estate brokerage Redfin in a deal valued at $1.75 billion, according to ABC News. This strategic transaction will provide Rocket, one of the largest mortgage lenders in the U.S., with direct access to Redfin’s extensive network of real estate agents and its highly trafficked home and rental listings platform.

As reported by ABC News, Redfin’s platform attracts nearly 50 million monthly visitors and operates with more than 2,000 agents across 42 states. The acquisition will allow Detroit-based Rocket to integrate Redfin’s services, potentially streamlining operations and enhancing customer engagement. The deal values Redfin at $12.50 per share, significantly boosting investor confidence in the Seattle-based company. Redfin’s stock surged 68.5% in morning trading, reaching $9.81 per share, while Rocket Cos. saw a 15% decline in its stock value.

According to ABC News, Rocket anticipates substantial financial benefits from the acquisition, estimating $140 million in cost savings by eliminating operational redundancies. Additionally, the company expects to generate more than $60 million in added revenue by leveraging Redfin’s agent network to provide clients with complementary real estate services, such as title insurance and loan servicing.

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Redfin CEO Glenn Kelman is expected to continue leading the real estate brokerage division and will report to Rocket Cos.’ CEO. The terms of the agreement stipulate that each share of Redfin common stock will be exchanged for 0.7926 shares of Rocket Cos. Class A common stock. This exchange ratio represents a 63% premium over the volume-weighted average price of Redfin stock over the 30 days ending March 7.

Upon finalization of the deal, current Rocket Cos. shareholders will hold approximately 95% of the combined company, with Redfin shareholders owning the remaining 5%. The boards of directors for both companies have approved the acquisition, though Redfin shareholders must still vote on the transaction. If approved, the deal is expected to close in the second or third quarter of this year, per ABC News.

Source: ABC News