Key Takeaways:
UWM Holdings Corp. escalated its bidding war for Two Harbors Investment Corp., increasing its all-cash offer to $12.50 per share on Monday in a direct challenge to a rival deal and urging shareholders to reject the competing proposal.
"Our offer is again a clearly superior offer, providing higher value for stockholders on a cash basis," UWM Holdings said in an open letter to Two Harbors stockholders, arguing the board has a duty to maximize value.
The revised bid from the mortgage lender, also offering an option of 2.3328 of its own shares, is an increase from its prior $12.00 per share proposal. It represents a direct premium over the $12.00 per share cash transaction Two Harbors currently has in place with CrossCountry Mortgage, LLC.
The move puts pressure on Two Harbors' board ahead of a special stockholder meeting scheduled for May 19 to approve the CrossCountry merger. UWM's campaign, which includes filing preliminary proxy materials, aims to persuade shareholders that its offer is superior, alleging the CrossCountry deal structure benefits management with $35 million in payouts at the expense of shareholder value.
UWM Holdings has been the primary driver of value for Two Harbors stockholders throughout the acquisition saga. The bidding started with an offer from CrossCountry that valued Two Harbors at $10.80 per share, which was later increased to $11.30 and then to $12.00 in response to UWM's unsolicited bids.
In its letter, UWMC criticized the Two Harbors board for its refusal to engage, suggesting the board's allegiance is to a deal structure that provides immediate cash payouts for management rather than maximizing value for stockholders. "The result of the TWO Board's repeated efforts to preserve the CCM deal is that they merely achieve the minimum value offered rather than conducting a process that truly maximizes value," UWMC stated.
UWM Holdings asserts it has an "expeditious path to completion," estimating a transaction could close within approximately two months of signing an agreement. The company is urging Two Harbors stockholders to vote against the CrossCountry merger proposal to force the board to negotiate with UWMC.
This article is for informational purposes only and does not constitute investment advice.
