Rocket Companies, a Detroit fintech platform focusing on the mortgage, real estate, title and personal finance industries, announced on Monday that it had agreed to purchase Mr. Cooper Group Inc., a Texas-based mortgage servicer, for $9.4 billion.
Under the terms of the agreement, Rocket will acquire Coppell-based Mr. Cooper in an all-stock transaction in which shareholders of Mr. Cooper’s common stock will receive 11 shares of Rocket for every Mr. Cooper share owned, with this exchange valuing each share at $143.33.
Rocket’s Detroit-based executive legal counsel and secretary, Tina V. John, worked alongside Paul Weiss, which served as Rocket’s sole legal adviser in the deal.
Mr. Cooper’s New York-based EVP and chief legal officer, Carlos M. Pelayo, worked alongside Wachtell, Lipton, Rosen & Katz and Bradley Arant Boult Cummings.
New York-based partners Mark F. Veblen and Jenna E. Levine led the Wachtell, Lipton, Rosen & Katz team that contributed to the deal.
The remainder of the Wachtell team were also all New York-based and included Audrey Y. Cho, Estefania Laureano Mena, Sabina M. Beleuz-Neagu, Lexie R. Shah, Damian G. Didden, Jordan Cohen-Kaplan, David E. Kahan, Michael J. Schobel, Dixing Tang, Anna O’Carroll, Gregory E. Pessin, Rod N. Ghods, Michael A. Chaia, Justin R. Orr, Joshua M. Holmes and Zachary B. Becker.
“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,” said Jay Bray, Mr. Cooper Group chairman and CEO, in a news release.
When the deal is complete, Mr. Cooper will pay its shareholders a $2.00 per share dividend. Each of these transaction terms was designed to make the process tax-free for Mr. Cooper’s shareholders.
The deal is expected to close in the fourth quarter, and when it does, Rocket shareholders will own 75 percent of the combined company, and Mr. Cooper shareholders the remainder. The transaction is also expected to be immediately accretive to Rocket’s earnings per share and add to its operating cash flow.
Once the transaction closes, Bray — who is based in North Texas — will become the president and CEO of Rocket Mortgage, reporting directly to Varun Krishna, Rocket’s CEO. Furthermore, the combined company’s board will consist of 11 members, with nine from Rocket and two from Mr. Cooper, formerly know as Nationstar Mortgage.
The financial institutions advising on the deal included JP Morgan Securities for Rocket and Citigroup Global Markets for Mr. Cooper.
Through the combination and acquisition, Rocket will seek to drive up its high loan volume and further develop its long-term client relationships to generate recurring revenue and lower its client acquisition costs.
In addition, it will look to leverage this acquisition and its recently announced $1.75 billion purchase of Redfin, a Seattle-based digital real estate brokerage, to speed up the development of its AI-powered platform designed to streamline the home-buying process.