Compass says it rejected Realogy’s offer to sell

It’s the latest in the ongoing legal battle between the two firms

National /
Sep.September 06, 2019 05:21 PM
Realogy CEO Ryan Schneider and Compass CEO Robert Reffkin

Realogy CEO Ryan Schneider and Compass CEO Robert Reffkin

UPDATED: Sept. 6, 6:58 p.m.: With his back against the mats, Realogy CEO Ryan Schneider considered selling the brokerage to its chief rival: Compass.

In a statement Friday, the SoftBank-backed brokerage said Schneider even proposed a plan where the arch enemies would form a joint venture — a proposal Compass said it declined.

The statement was made in conjunction with Compass’ motion to dismiss an explosive lawsuit filed by Realogy earlier this summer. In the suit, Realogy accused Compass of illegal business practices, including “predatory” poaching and attempts at collusion.

“The motion reveals the lawsuit for what it is: an act of desperation in response to Realogy’s rapidly eroding market share,” a Compass spokesperson said in a statement Friday.

In the statement, Compass said if Realogy’s suit is not dismissed, Compass intends to file counterclaims against the New Jersey-based conglomerate, the parent company of the Corcoran Group and Coldwell Banker.

“Those counterclaims would be based on, among other things, a meeting arranged by Realogy CEO Ryan Schneider in which Schneider discussed that he had considered selling the company and discussed the kind of premium he believed Realogy’s board would want,” the statement said.

A spokesperson for Realogy denied Compass’ “fanciful allegations” and said the company looked forward to “setting the record straight.”

“In their insatiable quest for market share above all else, Compass has trampled on ethics, integrity and the legal rights of others,” the spokesperson said. “As a market leader, we have been a specific target of their unfair and unlawful behavior. We stand by the allegations in our complaint and will oppose the motion filed by Compass.”

A source close to the company told The Real Deal that Realogy is not for sale to Compass. “The truth is twisted here,” the source said.

Realogy’s stock has been in a downward spiral for the past year, as the company has battled shrinking margins and competition from rivals (namely Compass). On Friday, the stock closed at $4.93 per share, down 75.6 percent year over year from $20.24 a share last year. 

Founded in 2012, Compass was valued at $6.4 billion after raising $370 million in July. With a total of $1.5 billion in VC backing, it is widely expected to go public in the near future.

In addition to the lawsuit filed in July, Realogy is suing Compass and former finance executive Urvin Pandya for violating a non-compete. Last month, a New Jersey judge ruled that Compass hired Pandya even though doing so violated his non-compete with Realogy. A key piece of evidence was an email in which Compass recruiters acknowledged creating a “dummy job” for Pandya. “It’s not a smoking gun, but it’s about as close as you can get,” the judge said. 

 

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