Compass made headlines yesterday with news of a $4.2 billion stock-based acquisition of other competitor Anywhere Real Estate, in order to gain market share in a weakened housing market. The merger gives Compass great operating leverage, while rising interest rates are taking a toll on homebuying.
Merger to add $512 million in revenue
With the acquisition, Compass would tuck-in Anywhere’s title and escrow, relocation, and franchise businesses, which generate over $1 billion in revenue each year. Anywhere, based in Madison, New Jersey, has more than 30,000 agents in its affiliate network, and operates in 119 countries, and sells its brands Coldwell Banker and Century 21.
Under the terms, Anywhere shareholders receive a total of $13.01 per share, to paid in Compass Class A common stock, using an exchange ratio of 1.436 Compass for each Anywhere share. That represent an 84% market premium, based on the most recent closing share price. After the announcement, Anywhere’s stock surged nearly 55% to $10.97. Compass stock fell almost 15%.
Deal structure and stock market effects
When completed the combined company would have an enterprise value of about $10 billion, including debt. Morgan Stanley is financially advising Compass, and Goldman Sachs is financial advisor for Anywhere. The merger should close in append regulatory and shareholder approval in 3Q 2026.
The merger may fundamentally change the U.S. real estate brokerage landscape, which combines two of the largest tech enabled franchises under the same roof. The housing market is grappling with affordability and decreases in sales, and Compass seeks to enhance operational efficiencies and does not want to sacrifice national and global growth of company’s business model when consumer confidence reduces after the last rate hike.
