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Redfin (RDFN, Financials) agreed to be acquired by Rocket Companies (RKT, Financials) in an all-stock deal valued at $1.75 billion, with Redfin shareholders getting 0.7926 common class shares for each Redfin share. Anticipated to completion in the second or third quarter of 2025, depending on shareholder and regulatory clearance, the acquisition offers a 63% premium over Redfin's 30-day volume-weighted average price.
Based on its approach to simplify the homebuying process by combining Redfin's real estate search and brokerage services with Rocket's mortgage lending capacity, a Detroit-based fintech platform focusing on mortgage and real estate services stated the purchase fits their approach. More than 1 million current listings, over 50 million monthly visits from Redfin, and a network of 2,200+ real estate brokers spread across 42 states will now be available to Rocket thanks to the acquisition.
By combining mortgage origination, title, and servicing with Redfin's real estate network, Rocket hopes to create $200 million in synergies by 2027including $140 million in cost savings from removing redundant processes and $60 million in revenue synergies. By the end of 2026, the merger is expected to be accretive to Rocket's adjusted earnings per share.
After the purchase closes, Redfin investors will own 5% while Rocket owners would control around 95% of the whole company.
Rocket revealed during the deal intentions to streamline its corporate structure by grouping its stock classes from four to two. The reform will eliminate its Up-C structure, which now divides voting rights across many investors.
Additionally, Rocket's board declared a special cash dividend of $0.80 per share of Class A common stock, payable on April 3 to shareholders of record as of March 20.
Redfin shareholders' consent as well as regulatory clearanceincluding adherence to the Hart-Scott-Rodino Antitrust Improvements Actare needed for the transaction. Rocket anticipates the agreement to finalize within the second or third quarter of 2025.
This article first appeared on GuruFocus.