Publicly traded real estate technology company Doma Holdings has entered into a definitive agreement to sell to title insurance underwriter Title Resources Group (TRG) and become a private company.
Over the past year, the Max Simkoff-helmed firm has made its goal of becoming adjusted EBITDA profitable in 2023 widely known but failed to hit this mark. It reported an adjusted EBITDA loss of $3 million in the last quarter of 2023 and of $33.5 million for the entire year.
In 2023, Doma sold off its retail operations in Florida, the Midwest, Central and Northern California, and Texas and made a major pivot in its business strategy. Its most recent endeavor is Upfront Title, launched during the third-quarter earnings call with investors and analysts.
“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 prepared statement.
The companies announced late Thursday that TRG has agreed to acquire Doma’s outstanding shares at $6.29 per share of common stock, paying it in cash. This represents a 43% premium compared to the share’s closing price on March 27.
If the transaction is approved, Doma’s underwriting division, title insurance, and technology division will operate as subsidiaries of TRG under the umbrella of renamed Doma Technology LLC (Doma TechCo).
In addition, “Doma TechCo would continue to have access to underwriting services and continued technology deployment for Doma Title Insurance, Inc.,” the companies added.
Asset management firm Hudson Structured Capital Management Ltd., which is currently invested in Doma, is expected to maintain its investment in Doma TechCo.
Doma’s board of directors unanimously approved the transaction, but it still requires the approval of stockholders and insurance regulators – a group representing 25% of the voting power has already signed an agreement supporting the transaction.
The deal is also conditioned on the completion of certain transactions, an investment by Lennar into TRG, and other arrangements with HSCM. Also, per the agreement, Doma may solicit alternative acquisition proposals during a 50-day “go-shop” period.
The parties expect to close the transaction in the second half of 2024 when Doma will no longer be traded or listed on any public securities exchange.
In June 2023, TRG announced that HomeServices of America, a Berkshire Hathaway affiliate and one of the nation’s largest residential real estate companies, has increased its ownership stake in the company.
