Two Harbors Investment Corp. says it has received final regulatory approval for its merger with CrossCountry Mortgage, clearing the way for a planned Aug. 25 closing. The mortgage servicing rights-focused real estate investment trust announced the approval on Aug. 21 and said the transaction was expected to close before the market opened Monday.
Two Harbors, which trades as TWO on the New York Stock Exchange, said a CrossCountry Mortgage subsidiary will merge into TWO. The surviving company is expected to become a wholly owned subsidiary of CrossCountry Mortgage once the merger takes effect.
Advertisement
What the company announced
Under the announced terms, Two Harbors common shareholders will be entitled to receive $12.00 in cash for each share held immediately before the merger’s effective time. The company also said shareholders of record at the close of business on Aug. 24 would receive a stub-period dividend of $0.20326 per common share, paid with the merger consideration.
That dividend, according to Two Harbors, will not reduce or otherwise affect the $12.00-per-share merger consideration. The announcement did not present the payment as an ongoing ordinary dividend after the deal; it is tied to the transaction’s stated record date and closing mechanics.
Why the deal matters in mortgage finance
Two Harbors is a REIT that invests in mortgage servicing rights, residential mortgage-backed securities and other financial assets. Mortgage servicing refers to the administration of existing home loans, such as collecting payments and managing escrow accounts. Mortgage servicing rights are the contractual rights associated with that work and can be a material financial asset for firms in the sector.
Advertisement
CrossCountry Mortgage is a mortgage lender, while Two Harbors’ stated business is focused on assets tied to residential mortgages. The combination therefore connects a lender with a company whose portfolio has been built around mortgage servicing rights and residential mortgage-backed securities. The companies’ future strategy and operating impact after closing have not yet been established by the final-approval announcement.
Closing is expected, not yet reported as complete
The approval represents a key transaction milestone, but the release described the merger as expected to close on Aug. 25. Two Harbors’ release also includes customary forward-looking-statement language, warning that timing and completion can be affected by risks, uncertainties and closing conditions. This report therefore describes the deal as pending until the companies announce that it has closed.
For investors and mortgage-industry observers, the next concrete development will be a closing announcement or any update from the parties. The current release provides the final regulatory-approval status and the stated cash consideration, but it does not by itself establish the long-term business results of the combination.
Advertisement
Related video
This Consumer Financial Protection Bureau video is general background on mortgage servicing rules; it is not a video about the merger.
