Rocket Agrees to Acquire Mr. Cooper for $9.4B

Rocket Companies announced one of the largest acquisitions in the history of the mortgage industry.

Detroit-based Rocket agreed to acquire Dallas-based Mr. Cooper Group for $9.4 billion in an all-stock deal, the companies announced early Monday morning. Mr. Cooper shareholders would receive 11 Rocket shares for each share of Mr. Cooper common stock; the price per share value represents a 35 percent premium over the volume-weighted average price of Mr. Cooper common stock for the 30 days leading up to March 28.

The combined company would service more than $2.1 trillion in loan volume, or approximately one in every six mortgages in the country.

The deal is expected to generate $100 million in pre-tax revenue for Rocket, which is also projecting $400 million in pre-tax cost savings.

For Rocket, the deal will help expand the company’s AI-powered platform, thanks to the addition of Mr. Cooper’s seven million customers and 150 million customer interactions.

“By combining Mr. Cooper and Rocket, we will form the strongest mortgage company in the industry, offering an end-to-end homeownership experience backed by leading technology and grounded in customer care,” Mr. Cooper chief executive officer Jay Bray added in a statement.

The deal is expected to close in the fourth quarter. Once it does, Rocket shareholders will own 75 percent of the company, while Mr. Cooper shareholders will own the remainder. Bray will become president of Rocket Mortgage and report to Rocket Companies CEO Varun Krishna.

Rocket is already one of the largest mortgage companies in the country, supporting business lines that extend out into the real estate, title and personal finance businesses. Mr. Cooper, meanwhile, is the largest home loan servicer in the nation.

Rocket is in growth mode. Earlier this month, it agreed to acquire Seattle-based Redfin in a $1.75 billion deal aimed at boosting the company’s sale-to-mortgage pipeline. At the time, Rocket also announced a plan to consolidate its organization and capital structure to enhance equity liquidity and improve its ability to ink other transactions.

At its most recent earnings, Rocket reported total quarterly revenue of $1.8 billion and net income of $649 million.