Redfin stock spikes after mortgage giant Rocket announces a $1.75 billion deal to buy the company
Mortgage giant Rocket Companies (RKT) announced Monday it struck a deal to purchase digital real estate brokerage Redfin (RDFN) in an all-stock deal valued at $1.75 billion.
Redfin stock rose as much as 76% on the news. Rocket stock fell as much as 10%. In 2024, Rocket's revenues were $5.1 billion; Redfin reported revenue of $1.04 billion in 2024.
"Rocket and Redfin have a unified vision of a better way to buy and sell homes," Varun Krishna, CEO of Rocket Companies, said in the release. "Together, we will improve the experience by connecting traditionally disparate steps of the search and financing process with leading technology that removes friction, reduces costs and increases value to American homebuyers."
The deal comes at a time when the housing market has struggled amid high mortgage rates and tight home supply. Redfin's stock peaked at $96.81 in February 2021, when housing was thriving during the pandemic. Record-low interest rates played a crucial role in driving refinancing and fueling the market. RKT went public in August 2020, positioning itself to capitalize on these favorable market conditions.
According to a statement announcing the deal, Redfin shareholders will receive just under 0.8 shares of Rocket stock for each share of Redfin. Current Rocket shareholders will own about 95% of the combined company on a fully diluted basis, while Redfin shareholders will own approximately 5%.
Rocket shareholders will receive a special cash dividend of $0.80 per share. The deal values Redfin at $12.50 per share.
The companies said the combined company should be able to cut about $140 million in costs by 2027 — and realize an additional $60 million in savings from pairing Redfin agents with Rocket's financing infrastructure.
"Rocket and Redfin's approaches to lending and brokerage service have always been two halves of one vision to make the whole home-buying process magical," Redfin CEO Glenn Kelman said in the release.
The deal was approved by the boards of both companies and is expected to close in the second or third quarter of 2025.
Upon the agreement, Redfin CEO Glenn Kelman will continue to run Redfin's business, reporting to Rocket Companies CEO Varun Krishna.
Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
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