D
an Gilbert's Rocket Companies is set to acquire Washington state-based online real estate brokerage firm Redfin in a $1.75 billion deal. The all-stock transaction, announced Monday morning, is pending approval from Redfin shareholders and expected to close in the second or third quarter.
Redfin, headquartered in Seattle, helps customers buy, sell, and rent homes through its online platform. Founded in 2004, it went public in 2017 and reported having 4,778 employees at the end of last year. Despite significant losses, including a $164.8 million net loss for 2023, Redfin has an enterprise value of $2.36 billion and attracts about 50 million monthly visitors to its website.
Rocket Companies aims to boost Rocket Mortgage's business by acquiring Redfin, which helped customers buy or sell over 559,000 homes in 2023. The deal will expand Rocket's presence in residential real estate and create a unified vision for buying and selling homes.
Dan Gilbert, the billionaire founder of Rocket Companies, owns the Cleveland Cavaliers and has a reported net worth of $24 billion. He acquired Rocket Mortgage, formerly known as Quicken Loans, and has made significant investments in various businesses.
The Redfin deal is one of Rocket's biggest acquisitions since going public in 2020. Under the proposed agreement, Rocket shareholders will own about 95% of the combined company, while Redfin shareholders will hold around 5%. The deal values Redfin shares at $12.50, representing a 63% premium.
Rocket expects to achieve over $200 million in cost savings by 2027 through synergies and restructuring efforts. Last month, Redfin announced a partnership with Zillow for apartment building rental listings, which was expected to result in layoffs affecting about 450 employees.
In related news, Rocket Companies is reorganizing its structure and reducing the number of common stock classes from four to two. This move will enhance equity liquidity and make it easier to use common stock as acquisition currency in deals like the Redfin purchase.
