Two Harbors Investment Corp. said UWMC failed to submit a revised offer during a five-day waiver period, while UWMC accused the target's board of bad-faith negotiations — setting up a June 23 shareholder vote that will decide between competing bids.
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UWMC and Two Harbors clash over $12.50/share bid as vote nears
Two Harbors Investment Corp. said UWMC failed to submit a revised offer during a five-day waiver period, while UWMC accused the target's board of bad-faith negotiations — setting up a June 23 shareholder vote that will decide between competing bids.
UWMC and Two Harbors traded dueling accusations Monday over failed merger talks, with the mortgage lender's $12.50-a-share cash-and-stock proposal pitted against CrossCountry Mortgage's $12 all-cash offer ahead of a June 23 vote.
"The TWO Board is only pretending to engage," UWMC said in a statement, accusing Two Harbors of imposing an arbitrary five-day limit on discussions and refusing to consider any stock component in the consideration.
Two Harbors said UWMC did not submit a revised proposal by the June 12 deadline, despite obtaining a waiver from CrossCountry to negotiate. The target's board reiterated its support for CrossCountry's $12-a-share all-cash offer, which represents a 21% premium to TWO's unaffected price and a 119% premium to tangible book value as of March 31.
The outcome will determine whether Two Harbors shareholders receive immediate all-cash value or a higher headline price with stock exposure. With 46 of 53 regulatory approvals already secured for the CrossCountry deal and a targeted August closing, the June 23 vote is the decisive moment.
The Waiver Period That Produced No Deal
Two Harbors obtained a waiver from CrossCountry on June 8 to engage directly with UWMC, after proxy adviser Institutional Shareholder Services recommended the board pursue more direct talks. The waiver expired at 11:59 p.m. on June 12.
Two Harbors Chief Executive Officer William Greenberg invited UWMC CEO Mat Ishbia to New York on June 8, offering to meet "at any time" during the window. Ishbia scheduled a video call for June 11 — the second-to-last day of the waiver period — during which he raised concepts including making cash the default election or modifying the exchange ratio, according to Two Harbors. When asked to put a specific proposal in writing, Ishbia said he was unsure whether any proposal would be forthcoming and that UWMC would "have to look at this closer," Two Harbors said.
UWMC countered that Two Harbors refused to provide updated financial information, restricted who from UWMC could participate in negotiations, and categorically ruled out any form of stock consideration. "The only group that would not receive that optionality with respect to their benefits package is TWO management," UWMC said, suggesting management self-interest was blocking a deal.
The Stock vs. Cash Divide
The central dispute revolves around consideration structure. UWMC's proposal offers shareholders $12.50 in cash if they make an affirmative election, or 2.3328 UWMC shares as the default. Based on UWMC's June 12 closing price of $2.38 — an all-time low and more than 50% below its December 2025 level of $5.12 — the default stock component carried an implied value of about $5.55 per Two Harbors share.
Two Harbors argued that if just 7% of shareholders failed to make a timely election, a level it called realistic given its shareholder base, the aggregate value of UWMC's proposal would fall below CrossCountry's $12 offer. The gap would widen further when including CrossCountry's stub dividend.
"As UWMC's own CEO acknowledged during the June 11 call, 'no one smart is going to pick UWM stock at the price it's at right now,'" Two Harbors said in its letter.
UWMC defended the structure, arguing that the optionality of receiving stock that may appreciate or electing cash at $12.50 provides more value, not less. The company offered to adjust the default election to cash or provide a "higher of cash or stock" mechanism, proposals it said Two Harbors rejected outright.
What Happens Next
Two Harbors has scheduled its special meeting for June 23, after three adjournments. The company urged shareholders to vote for the CrossCountry deal on the WHITE proxy card, while UWMC recommended voting against it on the BLUE proxy card.
CrossCountry's deal is fully financed with binding commitment letters and has cleared early termination of the HSR waiting period. Two Harbors said 46 of 53 required regulatory approvals are already secured, putting the transaction on track to close in August.
If shareholders reject the CrossCountry deal, the path forward remains uncertain. UWMC said it remains "committed to pursuing a transaction with TWO" and is ready to engage in unrestricted good-faith discussions. But with the waiver period expired and no revised proposal submitted, the window for a competing bid may be narrowing.
This article is for informational purposes only and does not constitute investment advice.
