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After racking up a $124.4 million 2023 loss, title tech provider Doma has reached an agreement to go private through a merger with Dallas, Texas-based title insurance underwriter Title Resources Group.
The merger agreement, announced after markets closed Thursday, would be an all-cash transaction, with TRG acquiring all of Doma’s outstanding shares for $6.29 per share — a 38-percent premium over Doma’s closing share price of $5.54. With 13.52 million shares outstanding, the deal values Doma at about $85 million.
Max Simkoff
Doma CEO Max Simkoff called the agreement, which was unanimously approved by Doma’s board of directors but must still be approved by shareholders and regulators, “a win for Doma’s stockholders and for both companies’ employees and customers.”
“This transaction is an important step in the growth and evolution of Doma, further strengthening us as we deploy our market-tested technology for 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 partnering with the Doma team and providing excellent underwriting services to Doma’s many strong agents.”
If all conditions are met, the deal is expected to close in the second half of 2024, Doma said in a regulatory filing.
Funds associated with Homebuilder Lennar Corp.’s LENx investment division, which control about 25 percent of the voting power of Doma’s common stock, have signed off on the merger. But the company’s “disinterested stockholders” still have to approve the deal at a stockholder meeting that will be held at a date to be announced.
Closing the deal will also require “consent, approval or authorization from relevant insurance regulatory agencies without the imposition of a burdensome condition,” and the absence of a legal challenge, Doma disclosed.
The merger agreement also gives Doma 50 days to solicit alternative acquisition proposals from third parties.
Founded in 2016, Doma raised less than anticipated when it went public in a 2021 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.
Most of that came from a $300 million “PIPE” — a private investment in public equity — provided by institutional investors including BlackRock, Fidelity Management & Research Company LLC, The Gores Group, Hedosophia, SB Management, and Wells Capital. Lennar, an existing Doma investor, also committed PIPE financing, along with former Zillow CEO Spencer Rascoff, who made a personal investment.
But Doma was soon forced to downsize, as rising mortgage rates took a bite out of the refinancing business of the company’s clients.
Last year, Doma announced the sale of 22 retail title locations and operations centers in California to title insurer Williston Financial Group (WFG). To avoid being delisted from the New York Stock Exchange, last summer Doma executed a 1-for-25 reverse stock split.
Doma has developed a machine learning platform, Doma Intelligence, and other technology to automate the title and escrow processes. Originally tailored for mortgage refinancing, Doma has pivoted to adapt its technology to enable “instant underwriting” of title insurance for purchase loans.
In reporting Q4 and full year 2023 earnings on March 12, Simkoff said the Biden administration’s push to reduce closing costs for borrowers is an opportunity for the company, which since closing down its retail title operations is focused on offering its services to more lenders and mortgage platforms.
This year Doma launched a new pilot program, Upfront Title, which aims to provide lenders with “near-instant title certainty” and the ability to provide borrowers with “a price meaningfully below current industry standard rates for title insurance.”
Simkoff said one of the largest mortgage technology platforms in the country and a major national lender are using Upfront Title, but the program is not expected to generate significant revenue in the first half of the year.
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