Kansas City, Mo. After three weeks of speculation, H&R Block Inc. made good on a promise to offload its struggling mortgage lending business, agreeing Friday to sell Option One Mortgage Corp. to a private equity firm.
But the continuing decline of the subprime mortgage market, which provides money for people with poor credit, will cost Kansas City-based H&R Block.
Cerberus Capital Management LP's newly formed subsidiary, OOMB Acquisition Corp., will buy Option One for the value of Option One's net assets minus $300 million.
The final price of the sale won't be determined until the deal closes in H&R Block's second quarter, ending Oct. 31.
H&R Block Chief Executive Officer Mark Ernst told analysts that even at the discounted price, he was glad to have reached a deal.
Investors on Friday pushed H&R Block shares up as much as 8.2 percent to $23.62 before profit-taking took over, with shares ending up 73 cents to close at $22.56 on the New York Stock Exchange.