Two Harbors Investment Corp. (TWO) has received a third acquisition bid, the company disclosed Monday, further clouding the consummation of its previously announced merger agreement with UWM Holdings Corp. (UWMC), the parent company of Michigan-based lender United Wholesale Mortgage.
The owner of RoundPoint Mortgage Servicing, Two Harbors had previously agreed to be acquired by UWM in an all-stock transaction valued at $1.3 billion.
In a joint press release from December, UWMC and Two Harbors noted that the proposed tie-up would make United Wholesale Mortgage the eighth-largest mortgage servicer in the U.S. and could create up to $150 million in cost and revenue synergies on an annual basis.
The UWMC acquisition was thrown into question on March 19 when Two Harbors revealed it had received an unsolicited proposal to acquire all outstanding shares of the company’s common stock for $10.70 per share in cash, plus the payment of a $25.4 million termination fee that Two Harbors would be required to pay UWMC if it backed out of the deal.
On Monday, Two Harbors disclosed that the rival bid came from CrossCountry Mortgage (CCM), a retail lender headquartered in Cleveland. An ad hoc board committee determined that the CCM bid constituted a “company superior proposal,” giving Two Harbors the right to terminate the UWMC agreement following what’s known as a “match right period” when the initial bidder has the chance to improve its offer.
However, Two Harbors stated, “UWMC has proposed revised terms, and TWO and UWMC are in discussions regarding the revised terms.”
In an email to Scotsman Guide, a United Wholesale Mortgage spokesperson stated, “We have proposed revised terms and continue to be in discussions with TWO,” adding, “We will stay disciplined in our approach.”
Further complicating the situation, Two Harbors revealed Monday that it had received another unsolicited proposal from an additional third party. The rival bid from the undisclosed company exceeds the CCM bid by $0.05 per share, with the cash offer of $10.75 per share also including the $25.4 million termination payment.
A Two Harbors spokesperson declined to comment on Scotsman Guide’s request for additional information on the third bidder.
According to the press release, “The UWMC merger agreement remains in effect, and there can be no assurance that this process will result in TWO entering into an amended agreement with UWMC, terminating the UWMC merger agreement, or entering into a definitive agreement with CCM or any other party.”
CrossCountry Mortgage did not immediately respond to a request for comment.
A special meeting of TWO stockholders, which had been adjourned until March 24 to give shareholders additional time to vote on the proposed UWMC merger, has now been postponed until April 7 “in light of these developments,” according to the Two Harbors press release.
