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Mr. Cooper Group (COOP) Inks Deal Worth $500M With Blend Labs

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Mr. Cooper Group Inc. (COOP - Free Report) has signed a definitive agreement to dispose of its title business Title365 to Blend Labs, Inc. for a consideration of $500 million.

The amount comprises $450 million cash and a retained interest of 9.9%, subject to adjustments. The deal is expected to close in the second quarter of 2021, subject to necessary approvals.

Blend's technology platform and Title365's operational proficiency in title, escrow, and settlement will assist financial institutions more methodically and effectually engage with consumers through a fully integrated homebuying journey.

Shares of Mr. Cooper Group have inched up 3.8%, post the above announcement.

Deal Details

Per the agreed terms, Title365 will retain all the cash collected between the day of announcement and the closing for the acquirer’s benefit. Mr. CooperGroup does not expect any benefit to its earnings in the second quarter.

Also, Kristen Estrella, president of Title365, will continue to oversee its U.S. and India offices and will join Blend along with the Title365 team once the acquisition closes.

Notably, Goldman Sachs & Co. LLC, a unit of Goldman Sachs (GS - Free Report) , acted as the financial advisor of Blend Labs while Houlihan Lokey was the financial advisor to Mr. Cooper Group.

Benefits of the Deal

Mr. Cooper Group expects the deal to be accretive and record an after-tax gain of about $350 million along with cash proceeds, net of transaction costs and cash taxes, of nearly $400 million, upon the deal closure.

Management is pleased with the terms of the transaction and believes that the sale will enhance the company’s liquidity and tangible book value, apart from enhancing its shareholder value.

The company chairman and CEO said, “This decision follows a comprehensive strategic review in which we determined that Title365 would gain greater investor credit as part of a company like Blend, where it will have a significant strategic impact. This decision allows Mr. Cooper Group to focus on the growth and profitability potential within our core business of servicing and originations.”

In the past six months, shares of Mr. Cooper Group have soared 72.7% compared with the 63.6% rally of the industry it belongs to.

There is a constant rise in restructuring activities in the finance sector. Recently, to strengthen its private bank and wealth management offerings, SVB Financial Group (SIVB - Free Report) inked a stock-cum-cash deal to acquire Boston Private Financial Holdings, Inc. (BPFH - Free Report) .

Currently, Mr. Cooper Group currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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