Mr Cooper Group (COOP) M&A Announcement summary

Deal rationale and strategic fit

• The acquisition creates a fully integrated homeownership platform, combining origination, servicing, and real estate services, serving nearly 10 million clients and covering one in six U.S. mortgages.

• Leverages Rocket's origination and recapture strengths with Mr. Cooper's servicing scale and efficiency, aiming to reduce costs and enhance client experience.

• Accelerates the mission to help everyone home, utilizing 30 petabytes of combined data and advanced AI-driven technology for greater automation, personalization, and efficiency.

• Enables an end-to-end client journey from home search to financing, closing, and servicing, leveraging recent acquisitions including Redfin.

• Enhances earnings growth and stability across market cycles with a diversified revenue base and strong funding profile.

Financial terms and conditions

• All-stock transaction valued at $9.4 billion in equity, with a fixed exchange ratio of 11 Rocket shares per Mr. Cooper share, valuing Mr. Cooper at $143.33 per share and a 35% premium over the 30-day VWAP.

• Mr. Cooper shareholders will own approximately 25% of the combined company, Rocket shareholders 75%, and Mr. Cooper shareholders will receive a $2/share cash dividend before close.

• $5 billion of Mr. Cooper's unsecured notes to be restructured or refinanced, with $400-500 million in acquisition-related expenses.

• Transaction is intended to be tax-free for Mr. Cooper shareholders and is expected to close in Q4 2025, subject to shareholder and regulatory approvals.

• Immediate accretion to earnings per share upon close, with mid-teens accretion to 2026 EPS.

Synergies and expected cost savings

• Over $500 million in annual pre-tax run-rate revenue and expense synergies projected, with 50% phase-in by 2026 and full realization by 2027.

• $100 million in revenue synergies from increasing recapture rates and attaching title and closing services.

• $400 million in expense synergies from consolidating technology, support services, and eliminating duplicative costs.

• Synergies expected to be realized throughout 2026, with the deal projected to be accretive to Rocket's adjusted EPS immediately after closing.

• Revenue synergies also expected from optimized escrow/warehouse operations.