Tree.com, the Charlotte-based parent company of LendingTree and several other lead-generation sites, announced Wednesday that it has changed an agreement with Discover Financial to buy most of its home loan origination unit to help it close.
Wednesday, February 8, 2012
The two companies entered into an agreement in May 2011 for Discover to acquire most of the assets of Tree.com's Home Loan Center, as the Charlotte company hoped to focus on its core business. The companies hoped to have the sale closed by the end of the year. Tree.com shareholders approved the deal in August.
But the sale still hasn't gone through. Discover has already paid Tree.com $5 million in extension payments as the two companies work through the myriad closing details.
In Wednesday's announcement, the main change is to the payment structure. The deal is still worth $55.9 million.
Initially, Discover was to pay $35.9 million at closing, then $10 million on the one-year and two-year anniversary.
Now, Discover will pay $3 million on March 7, regardless of whether the deal is done. A total of $42.9 million will be due at closing and $10 million on the first anniversary.
Other terms of the closing were changed to allow more flexibility, but those changes were not disclosed.
The delay has not hurt Tree.com. With the wave of refinancings accompanying record-low interest rates, the home loan unit has been making a significant amount of money, boosting the company's bottom line.
Tree.com now says the companies are committed to closing the deal by mid-year.
Posted by Andrew Dunn at 3:30 PM