AG Mortgage Funding Believe, Inc. entered into a definitive agreement Tuesday to merge with Western Asset Mortgage Capital Corp., beating its competitor Terra Property Believe, Inc.
AG Mortgage, a pure-play residential mortgage REIT managed by Angelo, Gordon & Co. and proprietor of mortgage lender ARC Home, made a stock-and-cash provide for its glimpse Western Asset, managed by Franklin Resources, Inc. In consequence, Western Asset terminated its beforehand-offered acquisition agreement with Terra Property.
The AG Mortgage deal involves the payment of $10.11 per Western Asset trendy fragment and $1.12 in cash per fragment, representing a transaction rate of $11.23 per fragment, a 34% top class on Western Asset’s closing stock label on the NYSE on July 12, 2023.
“Combining these highly complementary portfolios will befriend scale our platform, generate elevated operational efficiencies, rate synergies, and accretive earnings development, and befriend all stockholders,” T.J. Durkin, president and CEO of AG Mortgage, acknowledged in an announcement.
Final yr, Western Asset, a non-licensed-mortgage participant, offered it changed into exploring a possible company sale or merger after posting a $22.4 million earn loss for the 2nd quarter of 2022.
The dispute between AG Mortgage and Terra Property started two months prior to now.
On June 28, Terra Property, managed by Mavik Capital Administration, and Western Asset offered that they entered into a definitive agreement to merge in a e book-for-e book deal. The transaction valued Western Asset at $17.30 per fragment, however the REIT’s shares traded down after the deal grew to alter into public. Merchants were skeptical about Terra Property’s fragment rate since it’s a non-traded REIT.
On July 13, AG made its first provide for Western Asset at $9.88 per fragment, at the side of $0.98 in cash. The uncover integrated an implied rate of $8.90 per trendy fragment ($54.5 million in total) and $0.98 per fragment in cash to shareholders ($6 million in total). AG Mortgage waived $2.4 million in administration charges in the first yr after closing.
Terra Property then enhanced its proposal, offering an implied fragment label of $15.96 per fragment, at the side of $1.43 per fragment and $8.75 million in cash, however Western Asset declined.
Vik Uppal, chairman & CEO of Terra Property and Mavik Capital Administration, expressed disappointment with the response to its proposal that he felt demonstrated “superior rate.” “
“[Western Asset] requested additional changes that we were unwilling to safe due to they wouldn’t had been in stockholders’ handiest pursuits, ” Uppal acknowledged in an announcement.
Bonnie Wongtrakool, Western Asset CEO, acknowledged the merger with AG Mortgage delivers rapid cash rate to Western Asset stockholders and can allow them to proceed to participate in the upside of the blended company.