Realogy, the nation’s largest real estate holding corporation, is set to sell off Cartus’ relocation services branch, in a transaction valued at $400 million, the company confirmed Thursday.
The sale of Cartus’ relocation business to SIRVA Worldwide, a global relocation firm, will allow Realogy to pay down corporate debt and use the balance to reinvest in the business.
“The sale of Cartus’s relocation business is part of Realogy’s strategy to simplify and streamline our company as we strengthen and hone our value proposition,” Realogy President and CEO Ryan Schneider said in a statement.
“This transaction will allow Realogy to retain and focus on growing elements of the business that are critical to our value proposition, including our Affinity and other lead generation partnership programs, which benefit from our established broker network,” Schneider added. “It will also allow us to use net proceeds to reduce debt, reinvest in the business, and drive greater long-term value for our shareholders.”
Realogy will receive $375 million in cash upfront and $25 million in a deferred payment. The transaction is expected to close in the first half of 2020.
Not included in the deal are Realogy’s affinity services, which the company will retain. Those include a military benefits program, a newly announced partnership with AARP and Realogy’s major partnership with Amazon, announced in July.
Realogy announced in September that the affinity program between Cartus and the United States Automobile Association (USAA) was being discontinued, as USAA shifted its focus to its core mortgage, banking and insurance businesses.
Realogy also signed a five-year agreement with SIRVA for brokerage services, so the company’s agents will continue to get relocation referrals from the program. Realogy already receives about 1,000 relocation transactions from SIRVA annually.
Schneider, on the company’s earnings call, called relocation services complicated and non-core for Realogy’s business. The move, according to Schneider, was as much about simplifying Realogy’s business and affinity services and the broker network are both lead generation tools for the company’s agents.
“This acquisition will offer clients broader choice, tremendous program flexibility and a heightened pace of innovation,” Tom Oberdorf, SIRVA’s chairman and CEO, said in a statement.
“SIRVA’s clients will benefit from access to Cartus’s well-established Broker Network, while SIRVA’s integrated household goods capacity will benefit Cartus customers,” Oberdorf added. “We believe the investments both companies have made in leading-edge technology solutions, exceptional client service delivery and growth will allow us to create the industry’s most capable, knowledgeable and accessible relocation management company to best serve our existing and future customers.”
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