CoStar Group Drops Bid to Buy CoreLogic, Citing Rising Interest Rates
The move comes the same week after CoStar upped its initial offer to buy CoreLogic, which provides real estate and mortgage data, by adding $450 million in cash for CoreLogic shareholders. But the recent increase in interest rates, which has cooled demand for mortgage applications, “changed CoStar’s view on the value of CoreLogic,” the company said.
“With interest rates moving up, now is not the time for us to aggressively buy into the residential mortgage market,” Andrew Florance, founder and CEO of CoStar, said in a statement.
CoStar has been vying for months to buy CoreLogic in its apparent quest to control all of the real estate industry’s data, but lost out to private-equity firms Stone Point Capital and Insight Partners, who made a $6 billion, all-cash offer for CoreLogic.
The Washington, D.C.-based CoStar didn’t sit idly by, though. It made a competing all-stock buyout offer of $6.9 billion soon after. It then upped its bid on Monday with the $450 million cash addition.
However, CoStar soured on the deal, after data released by Freddie Mac on Thursday showed that the 30-year, fixed-rate average for mortgages climbed above 3 percent for the first time since the summer.
Demand for mortgages had already started to slow, and the rising interest rates made it worse, with total application volume remaining essentially flat this week, CNBC reported. It also drove down the valuation for mortgage technology companies like CoreLogic, according to CoStar.