Rocket Companies, a leading mortgage giant, has agreed to purchase digital real estate brokerage Redfin in an all-stock deal worth $1.75 billion. The move is expected to create a consolidated home listings and mortgage lending platform.
Redfin’s stock surged 76% on the news, while Rocket’s shares fell 10%. Despite this, Redfin reported revenue of $1.04 billion in 2024, compared to Rocket’s $5.1 billion. The companies cited the outdated homeownership process as a major issue, causing frustration and driving up transaction fees.
The deal comes at a time when the housing market has struggled due to high mortgage rates and limited supply. Redfin had previously peaked at $96.81 in February 2021, when interest rates were record-low. Rocket went public in August 2020, aiming to capitalize on favorable market conditions.
Under the agreement, current Rocket shareholders will own about 95% of the combined company, while Redfin shareholders will retain approximately 5%. The deal is expected to save $140 million in costs by 2027 and generate an additional $60 million in savings from pairing Redfin agents with Rocket’s financing infrastructure.
Redfin CEO Glenn Kelman will continue to run the business under Rocket Companies’ leadership. The acquisition is expected to close in 2025, pending board approval.
Source: https://finance.yahoo.com/news/redfin-stock-spikes-after-mortgage-giant-rocket-announces-a-175-billion-deal-to-buy-the-company-151517692.html