Real estate brokerage giant Compass acquires rival Anywhere in $1.6B deal

Brokerage giant Compass has agreed to acquire rival Anywhere Real Estate in a deal that will combine the country's two largest brokerages and bring hundreds of Long Island real estate agents under one parent corporation.

Compass plans to buy Anywhere for $1.6 billion in an all-stock transaction, pending shareholder and regulatory approval. The total enterprise value of the combined companies, including Compass’ assumption of Anywhere’s debt, will be $10 billion, the companies said in a statement Monday.

While consumers may not be familiar with the parent company Anywhere, its real estate brands have a significant presence in downtowns across Long Island. Local real estate brokerages that operate as independent franchises of Anywhere's brands include Century 21 Realty, Coldwell Banker American Homes and Daniel Gale Sotheby's International Realty. 

Homebuyers and sellers are unlikely to notice a change when the deal is finalized because the brokerage brands operate independently, and consumers will still have many brokerages and agents to choose from, said Rob Hahn, a Las Vegas-based real estate market analyst. Some of the largest brokerages on Long Island, including Douglas Elliman, Signature Premier Properties and Keller Williams, remain as competitors to the combined company. 

But the merger between the two top U.S. brokerages by sales volume, according to RealTrends, is a seismic shift for the industry and will give brokerages greater clout in negotiations over how  agents share commission fees, he said. 

"The brokers are trying to reassert power," Hahn said. 

The deal will create a new company with about 340,000 affiliated real estate agents in 120 countries and territories, the companies said, including 250,000 that are part of Anywhere's franchise offices

It will marry the relative upstart Compass, founded in 2012 with the goal of leveraging technology to better serve agents and clients, with Anywhere’s global footprint and well-known brands. The acquisition also gives Compass access to Anywhere’s other real estate business lines, such as title insurance, escrow and relocation services, Compass founder and CEO Robert Reffkin said in Monday's announcement of the deal.

“By bringing together two of the best companies in our industry, while preserving the unique independence of Anywhere’s leading brands, we now have the resources to build a place where real estate professionals can thrive for decades to come,” Reffkin said.

The deal exchanges each share of Anywhere’s common stock for 1.436 shares of Compass Class A common stock, which values Anywhere’s stock at $13.01 per share, the companies said. That represents an 84% premium compared with Anywhere’s share price on Friday.

After the transaction, Compass shareholders will own about 78% of the combined company, and Anywhere shareholders will own about 22%, according to the announcement. 

Compass' stock price fell 15.7% Monday to $7.92 a share following the deal's announcement. Even after that decline, the brokerage's stock price has risen 36.6% so far this year. Anywhere's stock shot up 45.5% to close at $10.29. 

'We will still compete'

On Long Island, Compass has 19 offices. Anywhere's largest local franchises have dozens more, with hundreds of agents. Daniel Gale Sotheby's has 25 offices, Coldwell Banker American Homes has 19 and Corcoran has seven in the Hamptons and on the North Fork.

Frank DellAccio, a real estate broker who leads Century 21 AA Realty in Lindenhurst, said he's not expecting the deal to lead to major changes for his business. DellAccio, whose family has run its real estate business as a franchisee of Century 21 for nearly 50 years, said the brokerage has benefited from Century 21's branding, technology and training for new agents.

But there has never been collaboration in those areas with the other Anywhere-affiliated brokerages on Long Island.

"There's no kinship because we're under the same umbrella," DellAccio said. "We still compete. If you can provide a value proposition to the consumer, then you'll get the business. It doesn't matter what name you've got outside on your building."

The two companies were involved in about 1.2 million transactions during the 12-month period ending June 30, according to their announcement. 

Combining the brokerages and Anywhere's other businesses creates an opportunity "to deliver even more value to home buyers and home sellers across every phase of the home buying and home selling experience," Anywhere president and CEO Ryan Schneider said in a statement. 

The deal also strengthens Compass while it is fighting an industry battle over its strategy to offer sellers flexibility in how they market their homes. Compass sued online real estate marketplace Zillow earlier this year over a Zillow policy to restrict listings from its website that violate its rules around exclusive listings. That lawsuit is ongoing.

Hahn, the real estate analyst, expects to see an increase in those private listings when the deal is finalized. 

"In the near term, this only matters to agents and brokers," he said. "I don't think this impacts consumers at all, except for the growth of private listings." 

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.