Rocket Companies (RKT.N), opens new tab said on Monday it would acquire real estate listing platform Redfin (RDFN.O), opens new tab in an all-stock deal valued at $1.75 billion, seeking to boost its lending business.
Rocket's $12.50 per share offer equates to a near 115% premium to Redfin's Friday close. Redfin's shares were up about 70%, while Rocket's fell about 14% in afternoon trading.
Founded in 2004, Redfin operates a home search platform with more than 1 million for-sale and rental listings and a tech-powered brokerage of more than 2,200 agents.
Rocket, whose flagship business is its mortgage-lending arm, aims to lean on technology and AI to help link prospective buyers with its financing arm and speed up deals once the transaction closes, the company said.
"Because of the cross-sell synergy, we see the price as better than what Redfin would likely be able to achieve on its own as a residential broker," BTIG analysts wrote in a note.
Shareholders of Rocket will own about 95% of the combined company on a fully diluted basis, while Redfin shareholders will own the rest after the deal closes, expected in the second or third quarter.
Detroit-based fintech Rocket said it expects the combined company to achieve more than $200 million in run-rate synergies by 2027.
Redfin CEO Glenn Kelman is expected to remain in charge of the business.
Morgan Stanley is Rocket's financial adviser, while Goldman Sachs advised Redfin.
