Ellington Financial Inc. (NYSE: EFC), an Old Greenwich, Connecticut-based real estate investment trust (REIT) focused on both residential and commercial mortgage loans, is acquiring Great Ajax Corp. (NYSE: AJX), a New York City-based REIT that invests primarily in residential mortgage loans, in a stock-swap transaction.
In this transaction, each share of Great Ajax common stock will be converted into 0.5308 shares of Ellington Financial common stock, or approximately 12.5 million shares of Ellington Financial valued at about $172.5 million. The deal implies an offer price of $7.33 per share for Great Ajax common stock, a premium of 19% above its closing price of $6.13 a share on June 30.
Ellington Financial stockholders are expected to own approximately 84% of the combined company’s stock, while Great Ajax stockholders are expected to own approximately 16% of the combined company’s stock. The combined company will operate as Ellington Financial Inc. and its shares will continue to trade on the NYSE under Ellington Financial’s current ticker symbol, “EFC.”
Ellington Financial Management LLC, an affiliate of Ellington Management Group LLC, will continue to manage the combined company.
“We are extremely excited about the opportunity to add a significant portfolio of strategic assets, including over $1 billion of highly creditworthy first-lien residential RPL and NPL investments at attractive prices, which complement our existing investment portfolio nicely and align with our expertise and existing management platform,” said Laurence Penn, CEO at Ellington Financial. “We believe that the benefits of this acquisition also include greater operating efficiencies, a larger market capitalization, and a closer relationship with Gregory Funding, Great Ajax’s highly respected affiliated mortgage servicer. We believe that this transaction will position us well to drive accretive earnings growth and provide strategic and financial benefits to our stockholders.”
“We are pleased to combine our investment portfolios and create a company that we believe will be well positioned for growth and value creation,” said Lawrence Mendelsohn, Great Ajax’s chairman and CEO. “We look forward to working closely with the Ellington Financial team to complete the transaction and deliver value for our stockholders.”
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