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Tuesday, January 31, 2023

Guild Holdings (NYSE: GHLD) Announces Acquisition of Residential Mortgage Services

Guild Holdings Company (NYSE: GHLD) disclosed that it has acquired the Residential Mortgage Services (RMS). The firm has inked a merger agreement under which Guild will purchase RMS. Since its inception in 1991, it has started 70 offices across 14 New England and Mid-Atlantic states.

Guild is anticipating that this deal will be profitable to 2021 earnings per share. The deal will be completed in the third quarter of 2021, dependent on the governing authorization and other traditional execution conditions. This acquisition is beneficial for the firm as the addition of RMS will provide Guild valued new geography and a strong standard from which Guild can further raise its brand.

Furthermore, this acquisition will also allow Guild to generate durable volume as Guild and RMS have created 22% and 23%, more buying mix than the broader market since 20101, respectively. Moreover, this transaction is financially compelling for the firm as GHLD is anticipating concluding its successful long-term growth strategy by gaining a strong position in the Northeast that optimizes the near- and long-term growth profile of the firm.

In addition to this, the acquisition of Guild Holdings is a profitable opportunity to invest a large portion of additional cash created by historic levels of growth in the past year. This deal is the extension of Guild’s recognized and efficient purchase strategy.

Financial Details

It has been disclosed that as per the deal, the buying price is projected to be $196.7 million based on March 31, 2021, tangible book value, demonstrating 3.25x projected 2021 earnings. Furthermore, the final buying price will be decided by June 1, 2021, tangible book value, dependent on certain deal-related alterations.  RMS will also get a three-year earnout. The initial payment will be primarily in cash with key members of the RMS management team will get a meaningful part of their payment in stock.

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