CrossCountry Mortgage (CCM) has committed to paying shareholders of Two Harbors Investment Corp. (TWO) a prorated dividend if its proposed acquisition of the Minnesota-based real estate investment trust successfully closes.
TWO, which owns RoundPoint Mortgage Servicing and its large book of mortgage servicing rights, agreed to be acquired by CrossCountry for $12 per share on May 8 following a long series of bids and counterbids by CCM and the parent company of rival lender United Wholesale Mortgage (UWM).
According to a press release issued by CCM on Thursday, “The per share dividend amount payable by TWO shall be an amount equal to TWO’s most recent quarterly dividend actually paid before closing, multiplied by the number of days elapsed since the end of the calendar quarter immediately preceding the calendar quarter in which the Closing occurs through and including the day prior to the closing date, and divided by the actual number of days in the calendar quarter in which such dividend is declared.”
In simpler terms, CCM estimates that if the merger closes in the third quarter, the prorated dividend amount would provide additional cash consideration of up to 34 cents per share. Factoring in TWO’s second-quarter dividend and other merger considerations, CCM assesses the total estimated cash value of its updated acquisition offer at $12.45 to $12.68 per share.
CrossCountry’s acquisition of Two Harbors is contingent on the approvals of both regulators and a majority of TWO stockholders.
The Cleveland-based retail mortgage lender noted Thursday that it has received 39 of the required 53 regulatory approvals. A TWO shareholder meeting to vote on the CCM proposal is set for May 19.
However, owners of TWO stock have also been presented with an unsolicited offer from UWM. The Michigan-based wholesale lender is offering either $12.50 per share or a default stock consideration of 2.3328 shares of UWM Holdings Corp. common stock.
Two Harbors slammed that offer on Wednesday, calling it “illusory, predatory and unactionable.” TWO maintains that the CCM offer provides superior value to shareholders, claiming UWM’s proposal “carries financing, closing, business and credibility risks.”
That prompted a sharp rebuttal from UWM, which called TWO’s board “the poster child for poor corporate governance and bad faith conduct at the expense of their stockholders.”
