In a warning to its shareholders and a challenge to the parent of United Wholesale Mortgage (UWM), Two Harbors Investment Corp. (TWO) is threatening to walk away with “no deal at all” if TWO stockholders reject a merger proposal from CrossCountry Mortgage (CCM) and UWM refuses to modify its competing offer.
Two Harbors, which owns RoundPoint Mortgage Servicing, made those ultimatums in a Monday morning press release announcing the postponement of a special shareholder meeting until June 23 to “allow for further solicitation and engagement” with UWM.
That meeting has already been adjourned multiple times as TWO attempts to consolidate shareholder support behind CrossCountry’s all-cash offer of $12 per share. CCM stated on May 28 that the proposal currently on the table represents its “best and final offer.”
UWM’s most recent proposal, submitted May 11, includes a $12.50 per share all-cash option. But Two Harbors has balked at the default all-stock component of the offer, which would provide 2.3328 shares of UWM Holdings Corp. (UWMC) common stock for every one share of TWO stock.
In Monday’s release, TWO said it “challenges” UWM to submit a full all-cash offer with no stock option.
“TWO continues to consider the default stock consideration a non-starter and inconsistent with its fiduciary duties to all stockholders, and has communicated this repeatedly,” the company wrote, noting that UWMC stock closed at an all-time low of $2.59 on Friday.
UWM did not immediately respond to a request for comment on the latest TWO statement.
In an open letter to TWO shareholders, issued June 4, UWM accused the Two Harbors board of “relying on delay tactics that it hopes will wear down stockholders into accepting a less valuable transaction.”
UWM also noted its willingness to “consider enhancements to our terms,” including potential adjustments to the default stock election feature or by addressing other “structural concerns if TWO will finally listen to its stockholders and engage in good faith.”
TWO made it clear Monday that it is only prepared to engage with UWM if it scraps the stock feature of its proposal and brings an all-cash offer to the bargaining table.
Barring that, TWO warned: “The alternative to CCM is not a better deal. It is no deal at all.”
