CoStar cites the rising impact of interest rates on the mortgage refinancing market to change the company’s view of the value of CoreLogic.
The real estate juggernaut CoStar Group has withdrawn its offer to purchase CoreLogic and has ended further acquisition talks, CoStar announced on Thursday afternoon.
The decision comes after CoreLogic’s board of directors rolled back CoStar’s last offer Thursday morning, demanding more cash for shareholders and a shorter contract term to offset recent volatility in CoStar’s share price.
On Monday, CoStar increased its previous all-stock offering for CoreLogic by $ 7 billion by $ 6 per share, or an additional $ 450 million, bringing CoreLogic shareholders to $ 6 in cash per share and $ 0. 1019 shares of CoStar Group common stock would be received in exchange for that portion of CoreLogic’s stock.
The value of the proposed package was roughly $ 90 per share based on CoStar’s closing price on Feb.26, or $ 97 per share based on its 30-day volume-weighted average price, the company said in a statement on Monday.
The revised offer came a month after CoreLogic agreed to be acquired by private equity firm Stone Point Capital and Insight Partners for $ 6 billion.
However, in a press release, CoStar said that rising interest rates would negatively affect the outlook for the mortgage refinancing market, and as such, had “resulted in a sharp decline in valuations for residential technology companies in recent weeks, which has changed CoStar’s view of the value of CoreLogic.” . ”
After months of wildly low mortgage rates that led to a surge in refinancing rates, Freddie Mac announced Thursday that the average rate on a 30-year fixed-rate loan had risen above 3 percent for the first time since July.
“With interest rates soaring, now is not the time to aggressively buy into the residential mortgage market,” said Andrew Florance, CoStar founder and CEO, in a statement.
“We would like to congratulate Stone Point and Insight Partners on their successful offer to acquire CoreLogic. We thank the CoreLogic board of directors and management team for being involved in the process and congratulate them on a strong rating from their shareholders. “
“The CoStar Group continues to believe that a strategic combination of CoStar and CoreLogic has the potential to create significant value for all shareholders and that CoreLogic is an excellent company with a talented team,” added the company. “However, the CoStar Group strives to maintain its disciplined valuation approach in pursuing strategic acquisitions.”
Email Andrea V. Brambila.
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