Ocwen Financial Corporation announced today that it has reached a definitive agreement to acquire all outstanding shares of PHH Corporation.
Ocwen will make the acquisition for about $360 million in cash. The purchase price represents a 35% discount to PHH’s GAAP book equity as of Dec. 31.
With the acquisition, the company would service 1.9 million loans with an unpaid principal balance of $328 billion, and originate more than $3 billion in residential mortgage loans annually. Ocwen said that the increased size and scale of the company should create several strategic and financial benefits, including:
Accelerating Ocwen’s transition to a top servicing platform
Improving servicing and origination margins
Reducing fixed costs by eliminating redundant corporate overhead and public company-related costs
Providing a foundation to eventually enable the combined company to resume new business and growth
The deal is expected to close in the second half of 2018. Ocwen projects that by closing, there will be sufficient available cash on PHH’s balance sheet to enable $260 million of the $360 million purchase price to be funded out of PHH’s available cash while still providing sufficient liquidity to fund operations. Ocwen will also assume $119 million of PHH’s outstanding corporate debt.
“We are very pleased to announce the proposed acquisition of PHH, a leading nonbank servicer,” said Ron Faris, Ocwen president and CEO. “PHH is a high-quality servicer with complementary capabilities and business lines to Ocwen, making it a great strategic match for us. In addition to providing significant scale benefits, this transaction gives us the opportunity to migrate their existing Black Knight LoanSphere MSP servicing platform more quickly and with less risk than had we just implemented the system ourselves.”
“We are pleased to have reached an agreement with Ocwen, and we look forward to working with them to bring this transaction to a successful close,” said Robert B. Crowl, president and CEO of PHH. “we are very excited by the opportunity to build a stronger combined company for our servicing and subservicing clients, our borrowers, and our employees.”
The acquisition is subject to various closing conditions, including PHH shareholder approval and regulatory approvals.
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