Mr. Cooper Group Announces Sale of Title365 for $500 Million

Rhea-AI Summary

Mr. Cooper Group announced the sale of its title business, Title365, to Blend Labs for $500 million, comprising $450 million in cash and a 9.9% retained interest. The sale, expected to finalize in Q2 2021, will not contribute to earnings during that quarter. Mr. Cooper anticipates an after-tax gain of about $350 million and net cash proceeds of approximately $400 million post-transaction costs. The decision follows a strategic review to enhance focus on core servicing and origination business, reinforcing liquidity and tangible book value for shareholders.

Positive

• Anticipated after-tax gain of approximately $350 million from the sale.
• Expected net cash proceeds of around $400 million enhance liquidity.
• Strategic focus on core servicing and origination business may drive future growth.

Negative

• Title365 will not contribute to earnings in the second quarter of 2021.

Today Mr. Cooper Group Inc. (“Mr. Cooper Group”) announced the signing of a definitive agreement to sell its title business, which operates under the brand name Title365, to Blend Labs, Inc. for $500 million, consisting of $450 million in cash and a retained interest of 9.9%, subject to certain adjustments. The sale is expected to close in the second quarter of 2021, subject to customary conditions including regulatory approval. As part of the transaction, Title365 will retain all cash generated between today and closing for the benefit of the acquirer and as such is not expected to contribute to Mr. Cooper Group's earnings in the second quarter. Mr. Cooper Group expects to record an after-tax gain of approximately $350 million and receive cash proceeds net of transaction costs and cash taxes of approximately $400 million upon closing.

“The Title365 team has produced outstanding results, which contributed to Mr. Cooper Group’s strong profitability and operating momentum over the last year,” said Jay Bray, Chairman and CEO of Mr. Cooper Group. “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.”

Mr. Cooper Group Vice Chairman and CFO Chris Marshall added, “We’re pleased with the terms of the transaction which, once closed, will add meaningfully to our liquidity and tangible book value, and should reinforce our strong commitment to generating shareholder value.”

Wachtell, Lipton, Rosen & Katz acted as legal advisor to Mr. Cooper Group and Houlihan Lokey acted as financial advisor to Mr. Cooper Group.

About Mr. Cooper Group

Mr. Cooper Group Inc. (NASDAQ: COOP) provides quality servicing, origination and transaction-based services related principally to single-family residences throughout the United States with operations under its primary brands: Mr. Cooper® and Xome®. Mr. Cooper is one of the largest home loan servicers in the country focused on delivering a variety of servicing and lending products, services and technologies. For more information, visit www.mrcoopergroup.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210315005425/en/

FAQ

What is the significance of Mr. Cooper Group selling Title365?

The sale allows Mr. Cooper to focus on its core business areas while enhancing liquidity and tangible book value.

How much will Mr. Cooper Group gain from the sale of Title365?

Mr. Cooper expects an after-tax gain of approximately $350 million from the sale.

When is the sale of Title365 expected to close?

The sale is expected to close in the second quarter of 2021, pending regulatory approval.

What are the financial terms of Mr. Cooper Group's agreement with Blend Labs?

The sale is valued at $500 million, consisting of $450 million in cash and a retained interest of 9.9%.

Will Title365's sale affect Mr. Cooper Group's earnings?

Yes, Title365 is not expected to contribute to Mr. Cooper's earnings in the second quarter of 2021.