NEW YORK (CNNfn) - Intuit, the finance software provider and parent of financial Web site Quicken.com, is expanding its offerings in online consumer mortgages through its purchase of Rock Financial Corp. in a $370 million stock deal announced Thursday.
Bingham Farms, Mich.-based Rock Financial runs RockLoans.com, which will augment Intuit's QuickenMortgage online service to offer home mortgages in all 50 U.S. states and a direct lending model. Mortgage options will include conventional, sub-prime, government, home equity and jumbo loans.
"The acquisition of Rock Financial advances Intuit's Web strategy by giving us the mortgage expertise, technology and marketing resources to truly revolutionize the mortgage process," Intuit Chairman and acting CEO Bill Campbell said.
Together, Intuit and Rock, a leading independent U.S. mortgage lender, originated $3.5 billion in closed mortgage loans in the past year, the companies said.
Under terms of the agreement, Intuit will acquire all outstanding shares and options of Rock. The exact number of Intuit common shares to be exchanged will be determined by dividing $23 by Intuit's 20-trading-day average price prior to the Rock stockholders meeting that will be called to approve the transaction. The deal is expected to close in December 1999. Rock investors, however, won't receive more than 0.841566 or less than 0.579783 Intuit share given the caps set by the agreement for Intuit's average share price.
After news of the deal, shares of Intuit (INTU) were down 1 to 29-1/8; Rock Financial Corp. (RCCK) stock had inched up 1/8 to 20-1/4.
Daniel Gilbert, currently the chairman and CEO of Rock Financial, will become CEO of Quicken Mortgage, reporting to Mark Goines, the senior vice president of Intuit's consumer division.
Intuit buys Title Source
In a related transaction, Intuit also is buying the title insurance and escrow services provider Title Source Inc. for $6 million in stock, under the same exchange terms agreed to with Rock.
Intuit, a partner with CNNfn.com, said the two deals would be accounted for as a pooling of interests, and as a result of the acquisitions it will issue 12 million shares, which will have a dilutive effect on its annual per-share earnings of about 3 cents.
Intuit said the acquisitions will result in additional operating expenses but that operating efficiencies achieved in other parts of its business will offset the impact on its third- and fourth-quarter results in 2000.