Intuit Advances Web Strategy With Acquisition of Rock Financial - Company Business and Marketing

Edge: Work-Group Computing Report, Oct 18, 1999

Intuit Inc. has announced it has reached a definitive agreement to acquire Bingham Farms, Michigan-based Rock Financial Corporation, a leading provider of online consumer mortgages through RockLoans.com.

This acquisition will create a national online mortgage powerhouse that offers home mortgages on the Internet to customers in all 50 states, providing the greatest breadth and depth of mortgage options, including conventional, sub-prime, government, home equity and jumbo loans. The acquisition, a stock transaction valued at approximately $370 million, would be the largest completed in the online mortgage industry.

Combined with Rock Financial and RockLoans.com, Intuit's QuickenMortgage online mortgage service will add a direct lending model that will help revolutionize the mortgage process. With this direct lending model, QuickenMortgage provides customers the speed, efficiency and convenience of Internet-based mortgage lending as well as the ability to work directly with an experienced lending team during every step of the process. This combination of technology and customer service gives consumers greater confidence as they make a critical financial decision, while also reducing the time, cost and complexity of the mortgage process.

Customers also will continue to have the ability to compare and apply for mortgages from many lenders on the QuickenMortgage site. At the same time, the acquisition will enable Intuit to offer increased mortgage loan volume to its current financial institution partners, with less administrative hassle.

Acquisition to Advance Intuit's Web Strategy

"The acquisition of Rock Financial advances Intuit's Web strategy by giving us the mortgage expertise, technology and marketing resources to truly revolutionize the mortgage process," said Bill Campbell, chairman and acting CEO of Intuit. "A great number of consumers are looking for a faster and more efficient alternative to the traditional mortgage broker process, without sacrificing personalized customer service. This acquisition enables us to answer that need through a direct lending model while also producing higher loan volume for our financial services providers."

Both QuickenMortgage and RockLoans.com have been pioneers in the online mortgage industry. Operating under the QuickenMortgage brand, Intuit's mortgage subsidiary offers consumers an award-winning user-friendly Web site, access to a broad range of home mortgage programs in all 50 states and experienced loan officers who can answer questions and facilitate the entire process. In December 1999, Rock will be significantly expanding its Web/call center to accommodate more than 400 mortgage specialists in its new 110,000 square foot corporate headquarters in Livonia, MI.

Customers To Benefit From Combined Expertise, Offerings

Customers will benefit from an innovative range of features, including real-time credit checks, instant pre-approvals, around-the-clock loan status updates and the ability to review and print out all loan documents directly from the Web site.

In addition, Intuit will be able to respond to financial institutions' desire to buy completed loans from QuickenMortgage. Intuit also will be able to provide financial institutions with the technology and tools to deliver innovative online mortgage solutions on their Web sites, as many institutions have requested.

"Intuit shares our vision of using the Internet and a direct lending model to offer customers the most efficient and convenient mortgage process possible," said Daniel Gilbert, chairman and CEO of Rock Financial. "By teaming Rock's experienced mortgage professionals, our state-of-the-art technology and our marketing infrastructure with QuickenMortgage's market strength and Intuit's customer base of 11 million Quicken users, we can deliver tremendous value to both our financial services providers and our end customers."

Intuit launched its QuickenMortgage site in November of 1997 and has since become one of the leading Web-based marketplaces for mortgages, helping consumers to easily shop, compare and apply for mortgage loans from 17 different lenders in a hassle-free environment. QuickenMortgage originated more than $1.2 billion in closed loans in fiscal 1999, which ended July 31, 1999.

RockLoans.com was launched in January 1999, leveraging Rock Financial's 15 years of mortgage lending expertise. Together, Intuit and Rock have originated nearly $3.5 billion in closed mortgage loans in the past 12 months.

Terms of Agreement

Under the terms of the agreement, Intuit will acquire all of the outstanding shares and options of Rock in a transaction valued at approximately $370 million. The actual number of Intuit common stock to be exchanged for each Rock share will be determined by dividing $23 by Intuit's 20-trading-day average price prior to the Rock stockholders meeting that will be called to approve the transaction, but will not be less than .579783 shares (if Intuit's average stock price exceeds $39.67) or more than .841566 shares (if Intuit's average price is less than $27.33).