Realogy announced Monday it’s suing Madison Dearborn Partners (MDP) and SIRVA Worldwide to enforce the terms of a previously announced $400 million deal to sell Cartus’ relocation services branch. Realogy, in a statement, accuses MDP and SIRVA of using the global pandemic to avoid closing the deal.
“Realogy strongly believes that all conditions to closing of the transaction have been and continue to be satisfied and that MDP and SIRVA have made false claims in an attempt to avoid their obligations under the purchase agreement in light of broad-based economic uncertainties due to the global COVID-19 pandemic,” the company said in a statement.
Realogy said it delivered notice to SIRVA on April 24 that it satisfied all closing conditions to Sirva’s obligations under the purchase agreement and was committed to closing the transaction on April 29. Realogy also said it delivered all required financial information over the past two months that were required in the purchase agreement.
The next day, SIRVA allegedly told Realogy that it believes not all closing conditions have been satisfied or will be satisfied by the April 30 termination date set under the purchase agreement.
“Realogy strongly disagrees with SIRVA’s position and will pursue all legal remedies to ensure that SIRVA and MDP honor the commitments made under the purchase agreement,” Realogy said in a statement.
The sale of Cartus’ relocation business to SIRVA Worldwide, a global relocation firm, was supposed to help Realogy pay down corporate debt and use the balance to reinvest in the business. Realogy was set to receive $375 million in cash upfront and $25 million in a deferred payment.
After the announcement of the sale in November, Realogy said it was considering selling or divesting from other non-core businesses.
As part of the deal, Realogy also signed a five-year agreement with SIRVA for brokerage services, so the company’s agents will continue to get relocation referrals from the program. Realogy already receives about 1,000 relocation transactions from SIRVA annually.
Not included in the deal were Realogy’s affinity services. Those include a military benefits program, a partnership with AARP and Realogy’s major partnership with Amazon, announced in July 2019.
The lawsuit was filed in the Court of Chancery of the State of Delaware. The complaint is currently confidential.
A spokesperson for SIRVA told Inman, in a statement, that the company provided Realogy with information over the past weekend as to why it believed certain closing conditions Realogy was obligated to meet under the purchase agreement have not and cannot be satisfied. The spokesperson also said that the company has been working diligently to complete the acquisition over the last several months.
“Today we received a complaint filed by Realogy under the purchase agreement,” the spokesperson said. “Unfortunately, this complaint addresses none of the issues raised by us.”
“Instead, we believe the complaint constitutes a breach by Realogy of the purchase agreement,” the statement continues. “SIRVA strongly disagrees with the allegations in the complaint and will vigorously defend itself against all allegations made in the complaint and will continue to enforce all of its rights under the purchase agreement, including with respect to Realogy’s breaches of the purchase agreement.”
UPDATE: Story updated with comment from SIRVA spokesperson.