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- The deal will combine Rocket Mortgage’s mortgage lending expertise with Redfin’s online real estate brokerage platform.
- Rocket Companies is also restructuring its capital structure to simplify future acquisitions.
Dan Gilbert’s Rocket Companies plans to buy the online real estate brokerage firm Redfin, a $1.75 billion deal that would expand Rocket’s presence in all things residential real estate.
The all-stock deal was announced Monday morning and, pending approval by Redfin shareholders, is expected to close in the second or third quarter.
Redfin is headquartered in Seattle and helps customers buy and sell homes. It was founded in 2004, went public in 2017 and reported having 4,778 employees at the end of last year. Redfin has an enterprise value of $2.36 billion, according to the news release.
Rocket Companies said the acquisition will help to boost Rocket Mortgage’s business for home purchase mortgages. Rocket Companies is the corporate parent of multiple Dan Gilbert businesses, the biggest being Rocket Mortgage, formerly known as Quicken Loans.
The Redfin deal would be among Rocket Companies’ biggest acquisitions since it went public in summer 2020. One of Rocket’s previous big deals was its 2022 purchase of Truebill, now known as Rocket Money.
“Rocket and Redfin have a unified vision of a better way to buy and sell homes,” Rocket Companies CEOVarun Krishna said in a statement. “Together, we will improve the experience by connecting traditionally disparate steps of the search and financing process with leading technology that removes friction, reduces costs and increases value to American homebuyers.”
Redfin CEO Glenn Kelman is expected to stay on and continue to lead the Redfin business.
“Rocket and Redfin’s approaches to lending and brokerage service have always beentwo halves of one vision to make the whole home-buying process magical,” Kelman said in a statement.
Under the proposed deal, each share of Redfin common stock would beexchanged for a fixed ratio of 0.7926 shares of Rocket Companies Class A commonstock, which according to the news release, is equal in value to $12.50 per share and represents a 63% premium on Redfin’s average stock.
Rocket Companies shareholders would own about 95% of the combined company and Redfinshareholders about 5%, the news release said.
Rocket expects the combined company to achieve over $200 million in “synergies” or cost savings by 2027, including from ending duplicative operations and related costs.
Rocket restructuring
Also Monday, Rocket announced that it is paying a special $0.80 per share cash dividend to its Class A common stockholders and simplifying its organizational and capital structure by collapsing the current “Up-C” structure, ending the “high-vote/low-vote” structure and reducing its common stock classes to two from four.
The restructuring will enhance the company’s equity liquidity, the news release says, and make it easier to use common stock as “acquisition currency” in deals, including the Redfin purchase.
This story was updated to include new information
Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on X @jcreindl