CoStar cites rising interest rates’ impact on the mortgage refinancing market for changing company’s view on the value of CoreLogic.
Real estate juggernaut CoStar Group has withdrawn its bid to buy CoreLogic and ended any further acquisition discussions, CoStar announced Thursday afternoon.
The decision comes after CoreLogic’s board of directors pushed back on CoStar’s latest bid Thursday morning and asked for more cash for shareholders and a shorter deal time to make up for CoStar’s recent stock price volatility.
On Monday, CoStar upped its previous $7 billion, all-stock bid for CoreLogic by $6 per share, or an additional $450 million, so that CoreLogic shareholders would receive $6 in cash per share and 0.1019 shares of CoStar Group’s common stock in exchange for each share of CoreLogic stock.
The value of the proposed package represented approximately $90 per share based on CoStar’s closing price on February 26, or $97 per share based on the 30-day volume-weighted average share price, the company said in a statement 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.
But in a press release, CoStar said it believed rising interest rates would negatively impact the outlook for the mortgage refinancing market and therefore had “caused valuations for residential property technology companies to decline significantly in recent weeks, which has changed CoStar’s view of the value of CoreLogic.”
After months of wildly low mortgage rates, which fueled a surge in refinancing interest, Freddie Mac announced Thursday that average rates for a 30-year, fixed-rate loan have now ticked back up above 3 percent for the first time since July.
“With interest rates moving up, now is not the time for us to aggressively buy into the residential mortgage market,” said Andrew Florance, CoStar founder and CEO, in a statement.
“We wish to congratulate Stone Point and Insight Partners on their successful bid to acquire CoreLogic. We thank the CoreLogic Board and management team for including us in the process and congratulate them on achieving a strong valuation for their shareholders.”
“CoStar Group continues to believe that a strategic combination of CoStar and CoreLogic had the potential to create significant value for all shareholders, and that CoreLogic is an excellent company with a talented team,” the company added. “CoStar Group is committed, however, to maintaining its disciplined approach to valuation as it pursues strategic acquisitions.”