Rocket Companies Acquiring Redfin for $1.75B

Rocket Companies is set to acquire Redfin in a billion-dollar deal in a bid to boost its sale-to-mortgage pipeline.

The Detroit-based Rocket agreed to buy Seattle-based Redfin in a $1.75 billion deal, the companies announced on Monday. The transaction is expected to close in either the second or third quarter.

The all-stock transaction comes in at a value of $12.50 per Redfin share. Each share of Redfin common stock will be exchanged for a portion of a Rocket share. The premium is 63 percent above the volume weighted average price of Redfin’s common stock for the 30 days ending March 7.

When the deal closes, Rocket shareholders will own 95 percent of the company on a fully diluted basis, while Redfin shareholders will own the remaining 5 percent.

“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,” Rocket CEO Varun Krishna said in a statement.

Rocket will be able to tap into Redfin’s consumer pool, which includes the 50 million website visitors it reports monthly. Redfin also counts 1 million active listings in both the rental and purchase categories and more than 2,200 agents across the country.

Kelman is expected to continue running the 20-year-old brokerage, reporting to Krishna. Rocket is also anticipating more than $200 million in run-rate synergies by 2027, including approximately $140 million in cost synergies.

Rocket also announced a consolidation of its organization and capital structure, eliminating a high-vote/low-vote structure and reducing its classes of common stock in half. The company said the move would enhance equity liquidity and improve its ability to make transactions such as the one with Redfin.

One of the nation’s top mortgage providers, Rocket is already riding a high from having a lawsuit dropped by the government’s Consumer Financial Protection Agency, which alleged a kickback scheme involving Rocket agents.

Redfin reported a $36 million net loss in the fourth quarter, more than the $23 million the firm lost in the same period in 2023. The company posted $244 million in revenue for the quarter, a 12 percent annual increase, and an adjusted EBITDA of $2.9 million.

The brokerage in February announced plans for a partnership with Zillow, as well as a planned round of staff cuts.