Temple-Inland Mortgage Co. has signed a letter of intent to purchase Knutson Mortgage Co.
Knutson services more than $6 billion in mortgages. Temple-Inland's servicing portfolio would increase to about $24 billion once the transaction closed. Terms of the deal were not disclosed.
The deal will probably close in 90 to 120 days, said Larry Charbonneau, president of Charbonneau-Klein, the Houston-based investment banking firm representing Temple-Inland.
His client has yet to do due diligence, he said.
The agreement follows a change in strategy for Minneapolis-based Knutson. In late December, its chief executive, Ray Sims, left to take a job at Great Western Financial. Glenn Wilson, who had been chief executive before Mr. Sims was hired, then returned to that post.
In an interview with American Banker last month, Mr. Wilson said Knutson would focus on being more of a regional than a national originator. And it appears that even with the prospect of new ownership, Knutson is likely to continue on this path.
Mr. Charbonneau said Knutson would continue to operate out of Minneapolis as a separate unit for at least 18 months.
Temple-Inland is a subsidiary of Guaranty Federal Bank, a thrift based in Dallas. Guaranty Federal is itself a subsidiary of Temple-Inland Inc., a paper and packaging company.
Knutson has been owned since 1992 by KMC Management Co., a group that includes the Minneapolis-based venture-capital firm Goldner, Hawn, Johnson & Morrison; a Chase Manhattan venture-capital subsidiary; and Knutson senior management.
Michael Goldner, managing director of Goldner Hawn, said the Knutson deal shows how the mortgage industry has changed in the last few years, specifically on the servicing side. He added that size has become even more important for mortgage servicers than it had been a few years ago.
"This was the right time for us to sell the business. This is a different industry today than what we invested in in 1992," Mr. Goldner said.
Knutson's current owners failed in an earlier attempt to sell it. Bear, Stearns & Co. was hired in 1994 to advise about a sale, but no buyers were found.
Dale Kurland, who was Bear Stearns' lead adviser to Knutson's owners at that time, is playing the same role again, but on her own. Ms. Kurland said that there had been no formal bidding for Knutson, but that other companies had expressed interest.