DOW JONES NEWSWIRES
Discover Financial Services (DFS) agreed to pay about $55.9 million to acquire Tree.com Inc.'s (TREE) mortgage origination business, as the company aims to add a residential mortgage component to its direct-to-consumer banking business.
The company, both a lender to cardholders and a processor of transactions, said it plans to originate eligible consumer mortgages to sell in secondary markets on a servicing-released basis. The unit--called Home Loan Center but operating as LendingTree Loans--originates and processes consumer mortgage loans.
The deal is subject to the approval of regulators and Tree.com's stockholders, and is expected to close by the end of the year.
For its part, Tree.com said the deal will allow it to focus on core businesses, and expects to use proceeds from the transaction for business investments.
Separately, Tree.com reported its first-quarter loss widened as selling and marketing expenses jumped, and a 25% drop in revenue, to $33.4 million.
Discover earns revenue on its credit card loans, as well as the fees it charges banks and merchants, such as grocery stores or gas stations, to process card payments. The company has been ramping up other businesses, such as private student and personal loans, as it seeks revenue growth.
Discover's shares closed up 2 cents at $24.20 Thursday, while Tree.com's ended up 4.7% at $5.40. Both stocks were inactive after hours.
-By John Kell, Dow Jones Newswires; 212-416-2480; email@example.com