v3.25.2
Acquisitions
 6 Months Ended
Jun. 30, 2025
Business Combination [Abstract]  
Acquisitions

Note 7. Acquisitions

On December 19, 2024, we completed the acquisition of all of the issued and outstanding common stock of 2-10 HBW pursuant to a purchase agreement dated June 3, 2024 for aggregate cash consideration of $585 million, subject to certain customary adjustments based on, among other things, the amount of cash, debt, transaction expenses, working capital and regulatory capital in the business of 2-10 HBW as of the closing of the transaction. 2-10 HBW is a leading provider of new home structural warranties that provide home builders insurance-backed coverage and/or administrative services for workmanship, systems and/or structural failures. 2-10 HBW is also a provider of home warranties.

Total consideration as of June 30, 2025, is as follows:

 

(In millions)

 

 

 

Cash consideration paid

 

$

 

432

 

Payment of 2-10 HBW indebtedness

 

 

 

157

 

Payment of 2-10 HBW transaction costs

 

 

 

15

 

Total purchase price consideration

 

 

 

604

 

Less: Acquired 2-10 HBW cash

 

 

 

(24

)

Total purchase price consideration, net of cash acquired

 

$

 

580

 

A summary of the consideration paid and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as determined based on management's preliminary assessment of the acquisition date fair value, is as follows:

 

(In millions)

 

 

 

Cash and cash equivalents

 

$

 

24

 

Marketable securities

 

 

 

15

 

Receivables

 

 

 

4

 

Prepaid expenses and other current assets

 

 

 

8

 

Property and equipment, net

 

 

 

6

 

Goodwill

 

 

 

469

 

Intangible assets

 

 

 

298

 

Long-term marketable securities

 

 

 

39

 

Deferred reinsurance

 

 

 

66

 

Reinsurance recoverables

 

 

 

9

 

Accounts payable

 

 

 

(1

)

Accrued liabilities:

 

 

 

 

Payroll and related expenses

 

 

 

(8

)

Home warranty claims

 

 

 

(7

)

Other

 

 

 

(6

)

Deferred revenue

 

 

 

(29

)

Deferred tax liabilities, net

 

 

 

(23

)

Unearned insurance premium

 

 

 

(234

)

Unpaid losses and loss adjustment reserves

 

 

 

(12

)

Long-term deferred revenue

 

 

 

(12

)

Other long-term liabilities

 

 

 

(1

)

Total consideration paid

 

$

 

604

 

 

As of June 30, 2025, the purchase price allocation for this acquisition has not been finalized. In particular, we are still evaluating the fair value of certain intangible assets. As we finalize the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period in 2025.

During the six months ended June 30, 2024, we made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date. These adjustments included updates to purchase accounting allocations and a $3 million reduction in the 2-10 HBW Acquisition purchase price. The impact of these adjustments was a $5 million increase in goodwill, an $11 million decrease in intangible assets, and a $2 million decrease in deferred tax liabilities, net.

In conjunction with the 2-10 HBW Acquisition, we recognized acquisition-related costs of $2 million and $6 million during the three months ended June 30, 2025 and 2024, respectively, and $4 million and $6 million during the six months ended June 30, 2025 and 2024, respectively. These charges represent direct third-party costs, including legal, accounting and financial advisory fees, as well as post-acquisition systems integration costs, and are included in selling and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income.

Unaudited pro forma revenue for the three and six months ended June 30, 2024 as if the 2-10 HBW Acquisition occurred as of January 1, 2024 was $598 million and $1,017 million, respectively.