Rocket Companies (RKT.N) announced on Monday its acquisition of home loan service provider Mr Cooper Group (COOP.O) for $9.4 billion, enhancing its mortgage sector with this second major deal of the month aimed at capitalising on the resurgence in U.S. housing demand. Improved home inventory and recent drops in long-term bond yields are attracting potential buyers back to the housing market after years of challenges caused by high interest rates and prices.
Earlier this month, Rocket purchased the real estate listing company Redfin (RDFN.O) in a stock-only transaction worth $1.75 billion. Rocket Companies has proposed 11 of its shares for every Mr. Cooper common stock owned. This equates to $143.33 for each share according to Friday's closing price, indicating a premium of approximately 37 per cent. Mr Cooper's shares, which announced an annual revenue of approximately $2.23 billion for 2024, surged over 18 per cent in morning trades, whereas Rocket dropped 7.5 per cent.
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According to Rocket, the agreement will contribute to gaining almost 7 million customers, boost loan volume, and enhance recurring revenue, all while reducing client acquisition expenses. The Mr Cooper agreement is anticipated to produce an extra $100 million in pre-tax income and may lead to $400 million in savings through optimising operations, corporate costs, and technology expenditures. The deal, anticipated to be finalised in the fourth quarter, is projected to enhance Rocket's adjusted earnings per share right after the closure.
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