Rocket Companies is expanding its footprint in the real estate market with an agreement to acquire Redfin Corp. in an all-stock transaction valued at $1.75 billion.
The Detroit-based financial technology firm will offer $12.50 per Redfin share, representing a 63% premium over the stock’s 30-day volume-weighted average price as of last Friday. The acquisition, confirmed in a company statement, aligns with Rocket’s broader strategy to strengthen its position in the housing sector.
Redfin’s stock surged as much as 80% following the announcement, marking its largest single-day increase. As of mid-morning trading in New York, shares had risen 75% to $10.20, pushing Redfin’s market valuation to approximately $1.3 billion. Meanwhile, Rocket’s stock declined by 11%, bringing its market capitalization to around $28 billion.
Redfin operates an extensive property search platform with over a million active listings and a brokerage network of more than 2,200 agents. Rocket, which has a portfolio spanning mortgage lending, real estate services, and personal finance, sees the acquisition as a move to expand its influence in home-buying transactions.
“This transaction reinforces Rocket’s strategy to grow its share in purchase mortgage originations,” noted RBC Capital Markets analysts in a report.
The U.S. housing market has faced challenges due to elevated borrowing costs, which led to a decline in sales of previously owned homes. Mortgage rates on a 30-year fixed loan have remained above 6.5%, prompting further consolidation in the industry.
Recent deals reflect this trend. Compass Inc. completed the acquisition of Christie’s International Real Estate in a $444 million transaction, while Redfin partnered with Zillow Group Inc. to feature Zillow’s rental listings exclusively on its platforms.
Redfin CEO Glenn Kelman is expected to remain in his role, reporting to Rocket’s CEO Varun Krishna.
Discussing market trends, Krishna noted a rise in homes selling at or below their listed prices, along with a longer inventory turnover period. “We’re also seeing some easing in mortgage rates,” he added. “These are promising indicators.”
Rocket anticipates generating over $200 million in operational synergies from the acquisition by 2027. The company has emphasized its investment in technology, particularly artificial intelligence, as a key driver for future growth.
“This acquisition accelerates our AI-driven strategy,” Krishna stated. “By integrating Redfin’s home search capabilities with Rocket’s platform, we can streamline financing, title, servicing, and closing processes.”
Morgan Stanley is advising Rocket on the deal, while Goldman Sachs is representing Redfin. The acquisition is expected to close in the second or third quarter of the upcoming year.
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By Proptechbuzz
By Ravi Kumar
