Realogy sues to enforce $400M Cartus deal
SIRVA agreed to buy the relocation services firm in November
UPDATED: April 27, 10:00 p.m.: Brokerage giant Realogy Holdings filed a lawsuit Monday to enforce the $400 million sale of its relocation business.
In a regulatory filing, Realogy said Madison Dearborn Partners and its portfolio company, SIRVA Worldwide Inc., were using the coronavirus pandemic as an excuse for not going through with the deal to buy Cartus. Days before the deal was set to close April 29, Realogy said SIRVA and MDP made “false claims in an attempt to avoid their obligations under the purchase agreement in light of broad-based economic uncertainties due to the global COVID-19 pandemic.”
The outbreak has upended the global economy, forcing buyers and sellers to put moves on hold. The suit was filed under seal in Delaware Chancery Court.
Realogy — parent company of the Corcoran Group, Sotheby’s International Realty and Coldwell Banker — announced plans to sell Cartus to SIRVA in November as it chips away at around $3 billion in corporate debt.
Realogy said it notified SIRVA on April 24 that it had fulfilled all of its obligations under the sale agreement, and it was committed to closing on April 29, according to the regulatory filing. But one day later, SIRVA said not all of the closing conditions were met — nor were they likely to be before the deal’s April 30 termination date.
“Realogy strongly believes that all conditions to closing of the transaction have been and continue to be satisfied,” the brokerage conglomerate said in the filing.
In a statement, SIRVA said it “strongly disagrees” with allegations in the complaint. SIRVA claimed it was the one to raise issues pertaining to unmet closing conditions. “Unfortunately, [Realogy’s] complaint addresses none of the issues raised by us,” the statement said. “Instead, we believe the complaint constitutes a breach by Realogy of the purchase agreement.”
In a separate lawsuit Monday, Anbang Insurance Group sued to enforce South Korea’s Mirae Asset Global Investments Co.’s purchase a portfolio of luxury hotels for $5.8 billion. That deal was set to close April 17.
In 2019, Realogy reduced its net debt by $78 million thanks to cost-cutting measures. CEO Ryan Schneider said by selling Cartus, the company was “divesting a non-core, very complex business” that would streamline Realogy’s business.