Combination delivers immediate benefits to Redfin clients and agents and Bay equity lending agents
RDFN — April 1 Redfin (www.redfin.com) completed its previously announced acquisition of Bay Equity Home Loans (www.bayequityhomeloans.com) for $137.8 million in cash. Combining Redfin’s national brokerage firm with Bay Equity’s full-service mortgage operation accelerates Redfin’s strategy to become a one-stop shop for consumers to buy, sell, rent and finance a House.
“As homebuyers battle affordability and bidding wars, it’s more important than ever that lenders and brokers work together on every customer’s offer,” said Redfin CEO Glenn. Kelman. “In dozens of markets, the field organizations of Bay Equity and Redfin have already met, and the difference in our agents’ enthusiasm to recommend a Redfin mortgage to their clients is night and day: because Bay Equity has hundreds rather than dozens of loan officers, because Bay Equity supports all types of loans, because Bay Equity was already one of the highest rated lenders to Redfin’s clients. But the main reason why we expect to start is how much the two teams have already enjoyed working together. The folks at Redfin have come out of every meeting saying “it was great”. There are a lot of ups and downs to come, but since signing of the deal in January, we have only felt better about it and how much value it can bring to our customers and our shareholders.”
Starting today, Redfin agents in 91 markets can use Redfin software to refer clients to a local Bay Equity loan agent. Brokerage agents and loan officers are matched based on where they work and the number of clients they serve to deliver exceptional service and value to Redfin clients from day one. Homebuyers can learn more about the benefits of working with Redfin and Bay Equity or submit an application by visiting redfin.com/mortgage.
Bay Equity CEO Brett McGovern said: “Our first priority is to connect Redfin’s approximately 2,400 senior officers to our 400 loan officers, so that we can help Redfin clients win in this competitive real estate market. . Being part of Redfin will help us meet customers more effectively. , which means we can offer Redfin homebuyers competitive rates while providing a seamless experience from pre-approval to closing. We do not expect Redfin agents to recommend us to clients because we are part of the same company, but because of the value and service we provide. Alignment with Redfin recognizes our 14 years of strategic growth nationwide and sets us on the path to becoming a top 10 lender.
Bay Equity will continue to operate under its own name and under its current management, creating refinance and purchase loans for clients working with Redfin agents as well as clients working with other brokerages. Upon completion of the transaction, Redfin is ending its Redfin Mortgage business and integrating all lending operations under Bay Equity. Over the next few weeks, 52 Redfin Mortgage employees will transfer to the Bay Equity team. Bay Equity will retain its headquarters in Corte Madera, California.
Transaction details and financial advice
Under the terms of the merger agreement, the purchase price is estimated at $137.8 million, representing a $72.5 million premium to Bay Equity’s tangible book value as of February 28. 2022. The final purchase price will be subject to adjustment based on the tangible book value of Bay Equity at the closing date, as well as certain other transaction-related adjustments. When the purchase was first announced in January, Redfin intended to pay ⅔ of the purchase price in cash and ⅓ in Redfin stock. Under the terms of the merger agreement, Redfin has the option to pay a higher percentage of the purchase price, including up to 100%, in cash under certain conditions. Redfin exercised this right and elected to pay 100% of the purchase price in cash.
Redfin expects the transaction to be accretive to 2022 earnings per share. The company will provide initial guidance on the Bay Equity business in its upcoming earnings call.
This press release contains forward-looking statements within the meaning of the federal securities laws, including those relating to the anticipated benefits of the acquisition for us, including that we expect the acquisition to be accretive to our benefit by action 2022, and our liquidation of Redfin Mortgage. We believe that our expectations related to these forward-looking statements are reasonable, but actual results may differ materially. Factors that could cause actual results to differ materially from the forward-looking statements contained in its press release include: (i) synergies from our acquisition of Bay Equity may not be as anticipated, may not be fully realized or may take longer to complete than expected; (ii) our liquidation of Redfin Mortgage is more complex or takes longer than expected; and (ii) the disruption to our business resulting from our acquisition of Bay Equity is greater than expected. For additional factors, please review the risks and uncertainties identified under the heading “Risk Factors” in our Annual Report for the year ended December 31, 2021, which is available on our Investor Relations website at http://investors.redfin.com and on the SEC website at www.sec.gov. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.
Redfin(www.redfin.com) is a technology-driven real estate company. We help people find a home with brokerage, instant home buying (iBuying), rental, loan, title insurance, and home improvement services. We sell houses for more money and charge half the fees. We also run the #1 real estate brokerage site in the country. Our homebuyer clients see homes first with on-demand viewings, and our loan and title services help them close quickly. Customers selling a home can receive an instant cash offer from Redfin or have our renovation team repair their home to sell for the best price. Our rental business helps millions of people across the country find apartments and houses to rent. Since launching in 2006, we’ve saved our clients over $1 billion in commissions. We serve more than 100 markets in the United States and Canada and employ more than 6,000 people.
Redfin may post information and analysis about the United States residential real estate industry on its corporate blog at www.redfin.com/news/housing-market-news/. We encourage investors and others interested in our company to review and subscribe to the information we post on our company blog, as some information may be important.