TAMPA, Fla., Sept. 4, 2012 /PRNewswire/ -- Walter Investment Management Corp. (NYSE MKT: WAC) ("Walter Investment" or the "Company") today announced that it has entered into a definitive agreement to purchase Reverse Mortgage Solutions, Inc. ("RMS") in a transaction valued at $120.0 million. Consideration in the transaction consists of $60.0 million of cash, $25.0 million of WAC stock and a $35.0 million seller MSR note. The Company anticipates the acquisition of RMS will be significantly accretive to both earnings and cash flow, and estimates that, on a pro forma basis, the acquisition would have been accretive to 2012 core earnings per share by approximately 25% had the acquisition been completed at the beginning of this year. The $120.0 million transaction value represents a multiple of approximately 2.6x RMS' expected 2012 EBITDA, or 4.1x its 2012 expected core earnings.
RMS, based in Spring, Texas, provides a full suite of services to the reverse mortgage sector, including servicing, loan origination, asset management and technology. RMS currently services approximately $12.0 billion in UPB of reverse mortgages and has issued approximately $1.1 billion of reverse mortgage backed GNMA securities ("HBMS") in the first half of 2012, ranking it as the fourth largest reverse mortgage servicer and the second largest issuer of HMBS in the sector this year. RMS is majority-owned by funds managed by Jacobs Asset Management, LLC ("JAM"). The acquisition of RMS will position Walter Investment as a full service leader in the $140.0 billion reverse mortgage servicing sector with significant growth opportunities in each of the RMS businesses, all of which generate strong earnings and cash flow. The acquisition represents an attractive extension to Walter Investment's high-margin, fee-for-service business model.
Mark J. O'Brien, Chairman and CEO of Walter Investment said, "We are extremely pleased to add the RMS business to the Walter Investment portfolio. RMS is led by a very experienced and well-respected management team and has performed exceptionally well since its inception in 2007. RMS is viewed as a preeminent servicer and originator in the reverse mortgage industry. The sector has very attractive long-term growth prospects and is currently undergoing significant structural change, providing us with an opportunity to capitalize on those dynamics. We believe RMS is uniquely positioned to capitalize on this opportunity and to continue capturing greater market share in both its origination and servicing businesses. We believe the combined strengths of our businesses will enhance our ability to take advantage of these opportunities."
Approvals and TimingThe Board of Directors of Walter Investment has approved the transaction. The transaction is subject to receipt of governmental approvals, third-party consents and the satisfaction of other customary closing conditions. The Company expects to complete the transaction during the fourth quarter of 2012.