Rocket Companies has closed its acquisition of Mr. Cooper for $14.2 billion, according to an announcement on Wednesday morning. The final acquisition price is 51 percent higher than the $9.4 billion price tag announced in March, due to Rocket’s recent stock rally.
Varun Krishna
“Homeownership is the bedrock of the American Dream. By combining mortgage servicing and loan origination, along with home search through Redfin, we are paving the path for Americans to own the dream,” Rocket Companies Director and CEO Varun Krishna said. “Jay Bray and his team have built a technology-driven platform that is the backbone of Mr. Cooper, helping it scale to become the largest servicer in the country.”
“By integrating Mr. Cooper’s servicing strength with Rocket’s origination capabilities and AI technology and established, strong national brand, our goal is to lower costs and make the process easier,” he added.
Rocket Companies announced its plan to acquire Mr. Cooper in March through an all-stock transaction valued at $9.4 billion.
The transaction terms gave Mr. Cooper shareholders a fixed exchange ratio of 11 Rocket shares for each share of Mr. Cooper common stock, a previous Inman report explained. Shares in Rocket were trading for $13 before the deal was announced in March but have since climbed above $19.
Rocket shareholders own about 75 percent of the combined company, and Mr. Cooper shareholders own the remaining 25 percent. The deal also stated Mr. Cooper Chair and CEO Jay Bray would become the president and CEO of the merged brand.
Rocket Companies and Mr. Cooper’s board of directors unanimously approved the deal; however, a group of Mr. Cooper shareholders contested the transaction and filed three lawsuits, claiming they weren’t given all the necessary information to properly evaluate the acquisition terms.
Mr. Cooper shareholder John McDaniels’ Aug. 6 complaint outlined the primary concerns, which included the failure to disclose “key assumptions” used to underpin three-year financial projections and a valuation analysis used to support a fairness opinion provided by Citigroup Global Markets Inc.
The mortgage servicer responded to the complaints two weeks later in a regulatory filing, stating that they were “without merit.” However, Mr. Cooper disclosed additional details about the deal in the filing, such as the $14 million fees and interest income that Citi, Mr. Cooper’s deal advisor, received during a two-year period before issuing its fairness opinion.
Jay Bray | Credit: Mr. Cooper
Despite the complaints, the Federal Housing Finance Agency approved the transaction on Aug. 27. A week later, Rocket Companies and Mr. Cooper’s shareholders approved the merger — opening the door for Rocket to reclaim its spot as the nation’s leading mortgage lender, a title that was snatched away by rival United Wholesale Mortgage in 2022.
The companies, which will operate under Rocket branding, estimate they will service more than $2.1 trillion in loan volume across about 10 million clients, which is equal to about one in every six mortgages across the nation.
Rocket Companies said the acquisition of Mr. Cooper and Redfin, which officially joined the company in July, moves them closer to building an end-to-end homeownership experience, buoyed by a $500 million investment in data and artificial intelligence technology.
“This transaction brings to a close a multi-year journey during which Mr. Cooper grew to become the nation’s largest servicer and produced enormous value for our clients, partners, stakeholders and investors,” said Jay Bray, the president and CEO of Rocket Mortgage. “Now, by joining forces with Rocket, we start a new journey, which I believe offers an even bigger opportunity.”
“Through the power of our platform and our people, we will create a more personalized experience that makes owning a home more attainable and easier to navigate,” he added. “Together, we will deliver the change the housing industry needs.”
Editor’s note: This story has been updated to correct that the final valuation of Mr. Cooper is 51 percent higher than the $9.4 billion price tag announced in March due to Rocket’s recent stock rally.
