Douglas Elliman Stock Surges On Merger Rumors, But Report Says Deal May Not Happen

Douglas Elliman (DOUG) shares surged as much as 50% to a two-year high of $3.20 on Friday morning following reports it received a merger offer valuing the firm at nearly twice its market capitalization based on the opening share price of $2.11.

The stock has since pulled back, trading 35% higher at $2.91 in midday trade.

According to a Bloomberg report, Anywhere Real Estate (HOUS) has approached Douglas Elliman with a merger proposal that would value the company at more than $4 a share. However, the report cited sources to say that Douglas Elliman is unlikely to accept the bid at its current level. 

The report also added that Anywhere would seek to sell Douglas Elliman’s property management business as part of the proposed deal. 

Anywhere Real Estate’s stock jumped 3.4% in midday trade.

If Anywhere can finalize a deal, it would gain a major residential brokerage with operations in large U.S. cities, including New York and Miami. 

Douglas Elliman has worked on some of the biggest luxury home sales, including Ken Griffin’s record-breaking $238 million Manhattan penthouse purchase in 2019.

Douglas Elliman stock closed at $2.14 on Thursday. At the current level, the company’s market capitalization is about $190 million, down from a peak of more than $900 million in December 2021, when it was spun out as a standalone company. 

After Friday’s rally, Douglas Elliman’s stock has gained 70% this year and 135% over the past 12 months. Its market value now stands at $260 million. 

The merger offer follows a turbulent period for Douglas Elliman, which has been grappling with the fallout from lawsuits involving former star agents Tal and Oren Alexander. 

The brothers, who left the firm in 2022, have faced multiple civil allegations of rape and sexual assault and were later charged with sex trafficking by federal prosecutors.

 They pleaded not guilty to those charges in February.

The company has also undergone leadership changes. Former CEO Howard Lorber, who announced his retirement last year, previously disclosed in an internal inquiry that he had intimate relationships with two brokers, according to a Bloomberg report.

Lorber was succeeded by Michael Liebowitz, who has focused on cost-cutting and expanding the firm’s development marketing business. Douglas Elliman reported $253 million in revenue for the first quarter.

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