Redfin shareholders on Wednesday signed off on the company’s agreement to be acquired by mortgage lending giant Rocket Companies, clearing the way for the deal to close this month.
The $1.75 billion merger agreement was approved by Redfin shareholders at a special meeting Wednesday, according to preliminary voting results.
The window for antitrust regulators to weigh in with questions or objections to the deal closed on May 8. In reporting first quarter earnings, Rocket executives said they expected to close the deal as soon as this quarter, which ends June 30.
Five Senate Democrats on Wednesday condemned Rocket’s plans to acquire Redfin and Mr. Cooper, and asked why antitrust regulators at the Department of Justice and Federal Trade Commission declined to challenge the Redfin merger.
“At a time when families already face a housing affordability crisis, these deals would combine the second-largest mortgage originator, the largest mortgage servicer, and the third-most-visited real estate brokerage website in the United States, into a massive, vertically integrated conglomerate that may reduce choice and raise prices for American families in the housing market,” Senate Democrats including Elizabeth Warren, Bernie Sanders and Cory Booker wrote regulators.
“Instead of competing for new customers by offering better products and services, Rocket is attempting to acquire two already massive companies to create a single, vertically integrated conglomerate,” the lawmakers claimed. “Rocket’s proposed acquisitions of Redfin and Mr. Cooper create the potential for Rocket to steer homebuyers to its own products, hike prices based on private data, and block competition.”
In a pitch to investors in March, Rocket executives said that by handling every aspect of homebuying and selling — from home search to mortgage financing and title and closing — transaction costs on the median priced home will drop from $40,000 to $20,000.
Redfin shareholders had filed four lawsuits complaining that shareholders were entitled to more information about the deal. Attorneys for Redfin shareholder Jason Morano, for example, sought class action certification to represent shareholders they claimed were left in the dark by a “materially incomplete and misleading” deal proxy statement.
Morano’s May 9 complaint sought a court order preventing Redfin shareholders from voting on the merger until they’ve received more details on Redfin deal advisor Goldman Sachs’ dual role as a lender to Rocket.
In a May 29 proxy statement, Redfin executives said all four lawsuits “are without merit, that no supplemental disclosures are required under applicable law, and that the requested additional disclosures are immaterial.”
Rocket, which also has its sights set on acquiring the nation’s biggest loan servicer, Mr. Cooper, says acquiring Redfin will help it achieve its goal of capturing 8 percent of the purchase loan market, and the $9.4 billion Mr. Cooper deal will put Rocket in touch with more homeowners who might be ready to refinance.
Rocket wants to handle 20 percent of U.S. mortgage refinancings, and Rocket CEO Varun Krishna said last month that the company has invested about $500 million in AI and other technology that will help the company scale its business without a proportionate increase in expenses after the mergers.
Rocket announced this week that it plans to issue $4 billion in debt and use the proceeds to retire notes held by Mr. Cooper subsidiary Nationstar Mortgage Holdings Inc.
Editor’s note: This story has been updated to include criticism of Rocket’s plans to acquire Redfin and Mr. Cooper by Senate Democrats.
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