Rocket Companies (RKT) said on Monday it will acquire real estate listing platform Redfin (RDFN) in an all-stock deal worth $1.75 billion. Shares of RDFN rallied about 80% in premarket trading with the $12.50-per-share offer representing a 115% premium to Redfin’s Friday close. Shares of Rocket Companies, whose main business is its mortgage-lending arm, fell around 15% on the news.
RKT Aims to Improve Buyers’ Experience
Founded in 2004, Redfin operates a home search platform with more than one million for-sale and rental listings and a brokerage of more than 2,200 agents. RKT wants to combine Redfin’s home search and real estate agent network with Rocket’s mortgage origination to create a one-stop-shop for homebuyers, using artificial intelligence to link prospective buyers with access to financing.
The deal will help give RKT access to Redfin’s nearly 50 million monthly visitors, while the companies are also keen to explore the use of AI to serve customers.
Glenn Kelman, CEO of RDFN, talked up the prospect of AI guiding 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.”
RKT saw an 8% year-over-year increase in purchase market share in 2024 said it aims to further accelerate growth through this acquisition.
“Rocket and Redfin have a unified vision of a better way to buy and sell homes,” said Varun Krishna, CEO of Rocket Companies. “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.”
RKT Aims for RDFN Synergies
Rocket said it expects the combined company to achieve more than $200 million in run-rate synergies by 2027, including approximately $140 million in cost synergies from rationalization of operations and other costs. In addition, RKT expects more than $60 million in revenue synergies from pairing the company’s financing clients with Redfin real estate agents.
Is RKT a Good Stock to Buy?
Overall, Wall Street has a Hold consensus rating on RKT stock, based on ten Holds and three Sells. The average RKT price target of $13.46 implies almost 15% downside.
