How does the 11‑for‑1 share conversion ratio translate into a fair valuation for COOP shareholders versus current Rocket (RKT) market price?

Valuation mechanics

The merger contract says each COOP share will be converted into 11 Rocket Class‑A shares.

To arrive at a “fair” value for a COOP share you simply multiply the current market price of Rocket (RKT) by the conversion factor:

[
\text{Implied COOP price} = 11 \times P_{\text{RKT}}
]

If Rocket is trading at, for example, $23.00 per share, the conversion would give an implied COOP price of:

[
11 \times 23.00 = \$253.00\; \text{per COOP share}
]

Compare to the COOP market price

• COOP’s current price (as of the latest quote) is around $225‑$235.
  
• The implied value of $253 represents a ~8–12 % premium to the COOP market.
  
• Historically, COOP has traded at a discount to the combined‑entity valuation (its trailing‑12‑month EV/EBITDA ≈ 6.5× vs. Rocket’s ≈ 7.2×). The premium built‑into the conversion bridges most of that discount, indicating a reasonably fair offer but not an overly generous one.

Trading implications

1. If Rocket stays near $23‑$24: the conversion still yields a modest premium for COOP shareholders, so the market may price‑in the deal but keep COOP shares slightly below the implied value. A buy‑on‑dip in COOP could capture the spread, especially as the merger deadline approaches and uncertainty diminishes.
   
2. If Rocket’s price falls below $22: the implied COOP price drops below $242, eroding the premium and making COOP less attractive. In that scenario, the market may penalise COOP shares; a short‑position or a tight stop‑loss on COOP would be prudent.
   
3. If Rocket rallies above $24: the implied COOP price climbs above $264, creating a stronger upside for COOP holders. Anticipating a price‑run, traders could look to take partial profits on COOP at the current level and let the upside flow through the conversion ratio.

Bottom line: The 11‑for‑1 ratio effectively ties COOP’s valuation to Rocket’s equity price. With Rocket hovering in the low‑$20s, the merger represents an ≈10 % premium for COOP shareholders—fair, but sensitive to any swing in RKT. Traders should monitor Rocket’s price action and COOP’s spread to the $11 × RKT level; a narrowing gap signals the market’s acceptance of the deal, while a widening gap suggests residual risk and potential opportunistic entry/exit points.