Two Harbors Investment Corp. (NYSE: TWO), a mortgage servicing rights-focused real estate investment trust, is rejected a renewed effort by UWM Holdings Corporation (NYSE: UWMC) to revive its canceled merger plans.
In March, Two Harbors announced a merger agreement with CrossCountry Mortgage that voided a previously announced merger with UWM, which was to receive a $25.4 million termination fee paid by CrossCountry.
The Pontiac, Michigan-based UWM, which initially acknowledged the collapse of its planned merger, has put forth a new $12.00 per share acquisition proposal that tops the $11.30 per share transaction that CrossCountry presented.
However, Two Harbors has turned down UWM’s effort to rekindle merger talks. In a press, UWM belittled the Two Harbors leadership for its decision.
“The TWO Board’s interpretation of the numbers don’t reflect the underlying math,” said the company’s statement. “UWMC’s fully financed $12.00 per share offer is clearly superior to $11.30 and provides a stock option on top of it, and the TWO Board is contorting itself with illogical arguments to suggest otherwise, preventing TWO stockholders from even the opportunity to receive significantly higher value.”
“The TWO Board’s arguments about the risks of closing a deal with UWMC are disingenuous, given that this same board already has recommended a transaction with UWMC just months ago, including by highlighting the ability to achieve necessary approvals,” the statement continued. “Further, UWMC’s financing is supported by a committed, unsecured $1.3 billion bridge facility from Mizuho Bank, Ltd. with no ratings trigger, no borrowing-base test, and no market contingency. The commitment letter contains customary market standard closing conditions, but to avoid any doubt, Mizuho has agreed to remove the customary due diligence condition that the TWO Board raised concerns about. This is more than can be said for CrossCountry’s financing, which still contains scant details even in the most recent announcement and the Board deliberately fails to provide any details about it for obvious reasons.”
Two Harbors issued its own statement on the matter, declaring, “UWMC asserts that it could close within two to three months of signing,” Two Harbors said. “This could only be true if UWMC intends to disregard state regulatory change of control approval requirements related to TWO’s mortgage servicing licenses, which at a minimum require 120 days’ advance notice.”
CrossCountry also weighed in with a statement that said it “remains committed to completing this transaction on the timeline and terms agreed with Two Harbors. A vote against the CCM merger is not a vote for $12.00 from UWM. It is a vote to reject the signed transaction and create uncertainty while UWM attempts to negotiate, sign, finance, and obtain approvals. We urge Two Harbors stockholders to vote in favor of the CrossCountry merger at the May 19 special meeting.”
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