In a significant move within the mortgage industry, Rocket Mortgage has announced the acquisition of its competitor, Mr. Cooper, in an all-stock deal valued at an impressive $9.4 billion. This strategic acquisition comes shortly after Rocket's purchase of the real estate listing company, Redfin, further solidifying Rocket's position in the market.
With the addition of Mr. Cooper Group Inc., Rocket aims to create a powerhouse that will account for one in every six mortgages in the United States. This merger is expected to add nearly 7 million new clients to Rocket's existing customer base. The company anticipates that this deal will not only boost loan volumes but also reduce client acquisition costs, further enhancing its competitive edge.
Jay Bray, the Chairman and CEO of Mr. Cooper, will transition to become the President and CEO of Rocket Mortgage. In a statement, Bray emphasized the vision behind the merger, stating, “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.” His leadership will guide the new entity as it strives to provide comprehensive solutions for homebuyers.
The U.S. housing market has faced significant challenges in recent years, with homebuyers and sellers grappling with soaring mortgage rates and inflated home prices. These factors have made homeownership unattainable for many Americans. In response, companies like Rocket, which are on an acquisition spree, are working to establish a one-stop shopping experience to assist prospective homebuyers in navigating these turbulent market conditions.
In this acquisition, Mr. Cooper shareholders will receive a fixed exchange ratio of 11 Rocket shares for each share of Mr. Cooper common stock. Following the merger, Rocket shareholders will hold approximately 75% of the combined company, while Mr. Cooper stockholders will own about 25%. The newly formed company’s board will consist of 11 members, with nine from Rocket and two from Mr. Cooper, reflecting a balance of leadership from both organizations.
Earlier this month, Rocket, headquartered in Detroit, also announced its acquisition of Redfin in another all-stock deal valued at $1.75 billion. Redfin, founded in 2004, boasts over 1 million listings for sale and rental properties on its online platform, making it a substantial asset in Rocket's portfolio.
In a report from the National Association of Realtors, existing home sales showed a promising increase of 4.2% in February compared to January, reaching a seasonally adjusted annual rate of 4.26 million units. This uptick is attributed to easing mortgage rates and an increase in available properties, which have encouraged home shoppers to re-enter the market.
The U.S. housing sales have been on the decline since 2022, primarily due to rising mortgage rates following the pandemic-era lows. Last year, sales of previously occupied homes fell to their lowest levels in nearly three decades, highlighting the need for innovative solutions in the mortgage and real estate sectors.
As Rocket Mortgage and Mr. Cooper join forces, the combined entity is poised to play a pivotal role in shaping the future of the mortgage industry, offering enhanced services and support to homebuyers across the nation.
