CoStar Cites Rising Interest Rates in Dropping Its Bid for Data Firm

CoStar on Monday submitted a revised bid to buy CoreLogic for $6.6 billion, or $90 a share in cash and stock, based on its Friday closing price. CoStar’s initial offer was valued at $6.9 billion, or $95.76 a share, based on where it was trading at the time.

Stone Point Capital LLC and Insight Partners had offered to buy CoreLogic for about $6 billion in cash, or $80 a share. CoreLogic’s board accepted that offer in early February.

But CoStar said Thursday it believes that rising rates will dampen the mortgage refinancing market and have weighed on valuations for companies focused on residential property technology. That changed its view of CoreLogic’s value, it said.

Fixed-rate, 30-year mortgage rates increased to a bit more than 3% on average, the first time they had risen above that threshold since July, Freddie Mac said Thursday. Lower rates during the pandemic helped to fuel a surge in mortgage lending, including to homeowners refinancing loans.

A spokesman for CoStar didn’t immediately respond to a request for comment about when the company decided to withdraw its bid. The company had envisioned challenging Zillow Group Inc. ZG -10.07% , behind its namesake home-listings platform, after buying CoreLogic.

“With interest rates moving up, now is not the time for us to aggressively buy into the residential mortgage market,” CoStar Chief Executive Andrew Florance said in a statement.

CoreLogic didn’t immediately respond to a request for comment about CoStar’s decision. Earlier on Thursday, prior to CoStar withdrawing its bid, CoreLogic Chief Executive Frank Martell said in a letter it believed CoStar’s revised bid, including the cash component, still wasn’t as strong as the offer from Stone Point and Insight.

Representatives for those two firms couldn’t immediately be reached.

Write to Micah Maidenberg at [email protected]