Actions of the mortgage giant Rocket (NYSE: RKT) exchanged about 8% less than 11:48 a.m. today, after the company announced its intention to acquire the major mortgage company Mr COOPER Group.
It is clear that Rocket is trying to consolidate and obtain market share in the environment of a difficult environment at high interest rate which has now rolled up the mortgage sector in recent years. A few weeks ago, Rocket announced that he would acquire Redfin In an agreement of $ 1.75 billion.
For Mr. Cooper Group, Rocket will pay the equivalent of $ 9.4 billion in an All-Stock agreement. The company plans to initiate $ 400 to $ 500 million in expenditure related to the acquisition, but then achieves $ 500 million in annual savings. The agreement should be immediately accretative for profits and increase the profits in a centile adolescence medium in 2026. The agreement will also add 7 million additional customers to Rocket customers, and the company will now be involved in one in six mortgages in the United States
“By combining Mr. Cooper and Rocket, we will train the strongest mortgage company In industry, offering end-to-end property experience supported by leading technology and founded on customer service, “said Jay Bray, Chairman and CEO of Mr. Cooper Group.
Although Rocket currently has most of its income from original mortgages, a company that does not work as well when interest rates are high, Mr. Cooper Group draws most of his mortgage income. This company works better when rates increase because fewer refinancing, which increases the value of mortgage duty (MSR).
The combined company will have a better balance of origin and MSR income, which may make it less indebted for the rate environment, which tends to lead to better evaluation. I do not think it is a bad strategy that Rocket to continue, but since it is an entirely in stock agreement which will initially dilute the equity of shareholders, it is not surprising to see the trading of the actions below today.
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