Redfin switched its consideration to Bay Equity Home Loans to all-cash as the real estate franchisor's stock price was down by almost half since the
On Jan. 12, the first day of trading following the transaction's announcement, Redfin closed at $34.36 per share. By April 1, when the acquisition was completed, Redfin's closing price was $17.51 per share.
The original terms of the deal called for Bay Equity's owners to receive two-thirds of the compensation in cash and one-third in stock.
"Under the terms of the merger agreement, Redfin has the option of paying a greater percentage of the purchase price, including up to 100%, in cash subject to certain conditions," according to a statement in the company's press release. "Redfin exercised this right and has elected to pay 100% of the purchase price in cash."
The purchase price was slightly higher than originally proposed, to an estimated $137.8 million (subject to adjustments) from $135 million in the January announcement. This is a $72.5 million premium over Bay Equity's tangible book value as of Feb. 28.
While Redfin had its own mortgage business prior to the transaction, it was on a much smaller scale, with only 250 employees (121 of those were eliminated because of the deal) and only offering conforming loan products. Given the
"As homebuyers struggle with affordability and