Weekly Real Estate News
Summary
Fathom Holdings and Neighborhood Intelligence mutually terminated their June 16 merger agreement on Oct. 5 after both boards concluded a combination at current valuations would not appropriately reflect either company’s fair value. Neighborhood Intelligence will retain its blockchain and digital-asset holdings, while the companies may explore narrower collaboration such as data sharing.
Fathom Holdings Inc. and Neighborhood Intelligence Inc. have called off their proposed merger, ending a transaction that had already been reworked once as the companies wrestled with changing valuations and the treatment of Neighborhood Intelligence’s digital assets.
The companies mutually terminated their June 16 merger agreement on Monday, according to Neighborhood Intelligence’s Oct. 5 Form 8-K. The filing says the agreement became null and void upon termination and the parties were relieved of duties and obligations arising after the termination date.
The decision followed reviews by both boards. In a joint announcement filed with the SEC, the companies said a merger at current valuations would not appropriately reflect the fair value of either business for shareholders and that the timing was not right to combine them.
The termination leaves Fathom, a residential real estate services company whose operations include brokerage, mortgage and title businesses, independent. Neighborhood Intelligence — the company formerly known as Bed Bath & Beyond — will also remain independent and retain ownership and control of its blockchain and digital-asset investments, including its position in tZERO.
A deal that was already being reconsidered
The companies signed their original merger agreement June 16. Under that structure, Neighborhood Intelligence agreed to acquire Fathom in an all-stock transaction that valued Fathom at approximately $53.4 million when announced.
By late September, however, the structure was already in flux. On Sept. 24, Fathom and Neighborhood Intelligence said they would explore an alternative transaction. Fathom disclosed that review in a Form 8-K filed the following day.
The proposed alternative contemplated combining Fathom with substantially all of Neighborhood Intelligence’s blockchain and digital assets, including interests associated with tZERO, Medici-related fund assets and GrainChain. The companies said at the time that the assets to be contributed would have a minimum value of $130 million under the contemplated structure.
That restructuring will not proceed either. Monday’s termination ends the June merger agreement rather than replacing it with the alternative transaction the companies had been discussing.
Neighborhood keeps its digital assets
Neighborhood Intelligence said its board and management reviewed the digital-asset holdings and held discussions with shareholders before deciding to keep them. The company said retaining the assets would preserve shareholders’ ability to participate in any future value and that tZERO should continue executing its own strategic plan.
That determination is separate from the companies’ decision to terminate the merger, according to the announcement.
Fathom Chairman Scott Flanders said the companies initially believed combining Fathom’s national real estate and title operations with Neighborhood Intelligence’s technology, data and other assets could create long-term value. At current valuations, he said, the merger no longer appropriately reflected the companies’ fair value.
Neighborhood Intelligence Chairman and CEO Marcus Lemonis similarly said the company concluded that retaining its blockchain assets was the better path for its shareholders while the two companies independently determined that current valuations did not support the merger.
Collaboration remains possible
The companies are leaving open a narrower relationship. They said they intend to explore potential collaboration, including data sharing and use of their complementary technology, businesses, relationships and other assets. Any such arrangement would require separate agreements, and neither company announced a new binding transaction Monday.
Neighborhood Intelligence also moved to unwind the securities-registration work associated with the deal. In an SEC filing Monday, the company requested withdrawal of the Form S-4 registration statement it had filed for the business combination, telling the commission it no longer planned to consummate the transaction described in that filing.
The collapse of the deal comes less than two weeks after the companies publicly acknowledged that the original structure needed reconsideration. For Fathom shareholders and the broader residential real estate industry, Monday’s filing removes the prospect of a near-term combination and returns the focus to Fathom’s performance as a stand-alone real estate services company.
