UPDATE: Discover To Speed Payments On Tree.com's Mortgage Unit
08 Febbraio 2012 - 5:17PM
Dow Jones News
Discover Financial Services (DFS) and Tree.com Inc. (TREE)
modified a pending acquisition agreement, requiring the credit-card
company to make certain payments sooner than planned.
Discover in May said it would buy most of the assets of Home
Loan Center, a mortgage subsidiary of Tree.com, for $55.9 million.
Originally, $20 million of that cost was deferred, with $10 million
due each on the first and second anniversaries of the deal's
closing.
Now Discover must pay $3 million of the deferred amount by March
7, regardless of whether the deal closes, $7 million at closing and
$10 million by the first anniversary.
The changes also allow Discover to further extend the deadline
for closing the deal to July 6, subject to certain conditions,
Tree.com said. Previously, Tree.com could terminate the agreement
if the deal didn't close on or before Oct. 9, 2011. Discover has
exercised a series of 30-day extensions it was allowed under the
original agreement, extending the deadline to March 7 and paying $5
million to do so. Those payments will be applied to the purchase
price due at closing.
"We now anticipate closing to occur by midyear," Doug Lebda,
chairman and chief executive of Tree.com, said in a statement.
Discover is committed to completing the deal by midyear, a
spokesman for the Riverwoods, Ill.-based company, said in an
email.
The pending acquisition is part of Discover's efforts to
diversify beyond credit cards, the largest part of its business.
The company has also been expanding its direct-banking operations
and pushing personal unsecured loans to build up its balance
sheet.
At the time the deal was announced, Discover executives said
they planned to originate mortgages and sell them into the
secondary market.
Discover's shares were down 0.7% at $28.73 in recent trading.
Tree.com's shares were up 5.4% at $6.49.
-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214;
andrew.r.johnson@dowjones.com
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