If approved by shareholders and regulators, the proposed merger would result in an all-cash transaction, with TRG acquiring Doma’s outstanding shares at a premium of 38% ($6.29 per share).
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Title technology provider Doma has reached an agreement with Dallas, Texas-based title insurance underwriter Title Resources Group to take it private through a merger after losing $124.4 million in 2023.
merger agreement, declare It will be an all-cash deal after Thursday’s close, with TRG acquiring all of Doma’s outstanding shares for $6.29 per share, a 38% premium to Doma closing stock price $5.54. Doma has issued 13.52 million shares, and the deal values it at approximately $85 million.
Max Simkov
Doma Chief Executive Max Simkoff called the agreement “a win for Doma shareholders as well as the company’s employees and customers.” The agreement, which has been unanimously approved by Doma’s board of directors, is subject to shareholder and regulatory approval.
“This transaction is an important step in Doma’s growth and evolution, further strengthening our capabilities as we deploy market-proven technology to large mortgage market participants,” Simkoff said in a statement.
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Scott McCall
TRG President and CEO Scott McCall said the company looks forward to “working with the Doma team to provide exceptional underwriting services to Doma’s many strong agents.”
The deal is expected to close in the second half of 2024, subject to all conditions being met, Doma said in a statement Supervision filing.
Funds associated with Homebuilder Lennar Corp.’s LENx investment unit, which controls about 25% of the voting power of Doma’s common stock, have approved the merger. However, the company’s “disinterested shareholders” still need to approve the transaction at a shareholders’ meeting, the date of which will be notified separately.
Dorma revealed that completion of the transaction would also require “the consent, approval or authorization of the relevant insurance regulatory authorities without onerous conditions” and that there would be no legal challenges.
The merger agreement also gives Doma 50 days to solicit alternative acquisition proposals from third parties.
Founded in 2016, Doma raised less than expected when it went public in 2021 through a merger with a special purpose acquisition company (SPAC). While many early investors cashed out before Doma completed its SPAC merger, the deal did add $350 million to the company’s balance sheet.
Much of that came from $300 million in “PIPEs” – private investments in public equity – provided by institutional investors including BlackRock, Fidelity Management & Research Company LLC, The Gores Group, Hedosophia, SB Management and Wells Capital. Doma’s existing investor Lennar and former Zillow CEO Spencer Rascoff, who has made a personal investment, have also committed to PIPE financing.
But Doma was soon forced to downsize as rising mortgage rates dented refinancing business for the company’s clients.
Last year, Doma announced the sale of 22 California retail title locations and operations centers to title insurance company Williston Financial Group (WFG). To avoid being delisted from the New York Stock Exchange, Doma executed a 25-for-1 reverse stock split last summer.
Doma develops a machine learning platform, Doma Intelligence and other technologies to automate the title and escrow process. Originally designed for mortgage refinancing, Doma has pivoted to adapt its technology to enable “instant underwriting” of purchased loan title insurance.
When reporting fourth-quarter and full-year 2023 earnings on March 12, Simkoff said the Biden administration’s push to lower closing costs for borrowers is an opportunity for the company, which has struggled since the shutdown of its retail operations. Focus on providing a servicing platform to more lenders and mortgages.
This year, Doma launched a new pilot program, “Upfront Title,” designed to provide lenders with “near-instant title certainty” and the ability to offer borrowers “prices well below current title insurance industry standard rates.” .
Simkoff said Upfront Title, one of the country’s largest mortgage technology platforms and a major national lender, is using it but does not expect the program to generate significant revenue in the first half of the year.
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