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H&R Block to sell off Option One Mortgage
By Lisa Kerner
Charlotte, N.C., April 20 - H&R Block, Inc. and its indirect wholly owned subsidiary Block Financial Corp. entered into a stock purchase agreement to sell all of the outstanding shares of capital stock of Option One Mortgage Corp. to OOMC Acquisition Corp.
OOMC was formed on behalf of one or more affiliated funds or managed accounts or affiliates of Cerberus Capital Management LP.
The cash purchase price will be the value of the tangible net assets of the business at the date of closing, less $300 million, a company news release stated. The tangible net assets of Option One were $1.27 billion at Jan. 31.
H&R Block may also receive an earn out of one-half of Option One's cumulative net income from its loan origination business for the 18 months following the closing, up to $300 million.
"Option One has developed into a leading provider of mortgage services for Americans whose financial needs have not been served by traditional lenders," chairman and chief executive officer Mark A. Ernst said in the release.
"With the changes occurring and being discussed for the U.S. mortgage industry, Option One will be positioned to more effectively compete, while allowing H&R Block to focus on growing its core tax, accounting and aligned financial services businesses."
H&R Block said it will cease operations of H&R Block Mortgage, a loan originator dealing directly with retail borrowers, prior to the transaction's close. The company will continue to provide prime residential mortgage loans through H&R Block Bank.
The financial adviser to H&R Block was Goldman Sachs & Co., and legal advice was provided by the Jones Day law firm.
Based in Irvine, Calif., Option One Mortgage is a national wholesale originator and servicer of non-prime residential mortgage loans.
H&R Block is a provider of tax, financial, and accounting and business consulting services and products based in Kansas City, Mo.
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