Rocket Mortgage is acquiring Redfin. You read that correctly
Rocket Mortgage is acquiring Redfin. You read that correctly
Investor sues Redfin over disclosures for $1.75B sale to Rocket
Shareholder vote on the sale scheduled for June 4
An investor identified as Bruce Miller filed a lawsuit against the firm and its board of directors, including CEO Glenn Kelman, alleging that they misled investors prior to a June 4 shareholder vote on a proposed $1.75 billion sale to Rocket Companies.
The lawsuit was filed the same day Redfin reported falling revenue and increased losses in its first quarter earnings. The company reported a net loss of $93 million, up from a loss of $67 million in the same quarter last year. The company’s web traffic fell to 46 million monthly average visitors, down from 49 million the same time last year.
The company did not hold an earnings call due to the pending transaction. “We can’t wait to join Rocket and build the future of homeownership,” Kelman said in a statement.
A spokesperson for Redfin did not respond to a request for comment.
Miller’s lawsuit calls into question the future of that partnership, as it seeks to prevent the merger from going through until the allegedly omitted information has been communicated “truthfully and completely.” If the deal is consummated, Miller is asking for it to be rescinded or to be awarded damages.
The lawsuit also claims that Goldman Sachs failed to disclose assumptions underlying its valuation analyses and details around how much the bank stands to gain as a counterparty on capped call transactions that result from the deal.
“When an advisor stands to earn fees through a separate financial deal if a proposed transaction is completed, this incentivizes the advisor to push a transaction through regardless of its merits,” the complaint states. “Thus, Goldman Sachs was incentivized to push for and recommend the Proposed Transaction in order to receive its advisory fee and the potential undisclosed ‘gain’ from the Capped Call Transactions.”
The lawsuit came on the same day that law firm Halper Sadeh announced an investigation into whether the exchange rate of Redfin for Rocket shares represents fair value to shareholders.
Rocket Mortgage is acquiring Redfin. You read that correctly
How will Rocket acquiring Redfin change the Boston condo market? Will Redfin change its name? Lets take a deep dive into this deal, and why did it happen?
Rocket Mortgage is acquiring Redfin. You read that correctly
Rocket to acquire Redfin
Rocket is buying Redfin in a $1.75 billion deal, the companies announced Monday.
Rocket is the parent company of Rocket Mortgage and other real estate-related businesses. Its acquisition of Redfin was described as an all stock transaction.
“Rocket and Redfin have a unified vision of a better way to buy and sell homes,” Varun Krishna, CEO of Rocket Companies, said in a news 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.”
“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,” Kelman said. “We want a customer to be able to check her phone to find out what she can afford, see which homes are just right for her, schedule a tour with a local, expert Redfin agent, and get pre-qualified for a loan, all in a matter of minutes. Varun and I see how much better real estate could be when AI guides customers not just through that first step in their search, but all the way home, through the sale, the loan and then a lifetime of accumulating equity and wealth.”
The deal is expected to close later this year.
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