Intuit, Inc. (Nasdaq: INTU) announced today that it will pay $370 million (US$) in stock to acquire Rock Financial Corp. (Nasdaq: RCCI), a Michigan-based mortgage lender.
The company plans to fold Rock Financial into its QuickenMortage online business. Daniel Gilbert, the current CEO of Rock Financial, will become the new CEO of QuickenMortgage.
In the deal, Intuit acquires a company that generated revenue of $90 million and closed over $2.3 billion in residential loans in 1998. Intuit claims that Rock Financial’s combination of expertise and customer support makes it a solid fit with QuickenMortage.
“The acquisition of Rock Financial advances Intuit’s Web strategy by giving us the mortgage expertise, technology and marketing resources to truly revolutionize the process,” said Intuit acting CEO Bill Campbell. “A great number of consumers are looking for a faster and more efficient alternative to the traditional mortgage broker process, without sacrificing personalized customer service. This acquisition allows us to answer that need.”
Making The Transformation
Founded in 1985 as a traditional brick-and-mortar mortgage lender, Rock Financial is making the switch to a primarily online business with call-center customer support. Nearly half of the company’s loan production in the last quarter was generated through its Web site.
In July, the company embarked upon a $20 million multi-media marketing blitz to promote its re-launched Web site. A few days later, Rock Financial announced that second-quarter revenues had slumped from $22 million in the second quarter of 1998 to $16.7 million in the corresponding quarter this year. The company produced a net loss of $500,000 for the quarter.
QuickenMortgage, launched in 1997, allows consumers to compare and apply for mortgage loans from 17 lenders. It originated more than $1.2 billion in closed loans in fiscal year 1999. Combined, the two companies will have originated nearly $3.5 billion in loans over the last 12 months.
Intuit likes Rock Financial’s customer support infrastructure. The company says it contacts an online applicant within 30 minutes of completing an application form, streamlining the process. It is expanding its 110,000 square-foot Livonia, Michigan call center to 400 mortgage specialists by year’s end.
Intuit also announced today that it has agreed to acquire Title Source, Inc., which provides title insurance and escrow services to real estate agents, for $6 million.