Termination comes after board concludes new agreement is in the "best interest of WMC's stockholders"
Western Asset Mortgage Capital (WMC) has terminated its planned merger with Terra Property Trust (TPT) to sign a new acquisition deal with AG Mortgage Investment Trust (MITT).
WMC announced Tuesday that it has formally ended its previously announced merger agreement with TPT. The move comes after WMC weighed its options and determined MITT’s acquisition proposal as superior to TPT’s.
“After careful consideration, the board, in consultation with its outside legal counsel and financial advisors, unanimously concluded that entering into the merger agreement with MITT is in the best interest of WMC’s stockholders,” said James Hirschmann III, chairman of WMC’s board of directors. “This combination will allow our stockholders to realize compelling value and we are excited about what our companies can achieve together.”
Read more: Terra Property's merger drama takes new twist
As a result, Western Asset and AG Mortgage have entered a definitive merger agreement, in which MITT will acquire WMC in a fixed exchange ratio stock/cash transaction valued at $7 million and about 9.99% of the aggregate per share. WMC stockholders will receive $11.23 per share.
Upon the closing of the transaction, MITT stockholders are expected to own roughly 69% of the combined company’s stock, while WMC stockholders will get approximately 31% of the combined stock.
The combined company will operate as “AG Mortgage Investment Trust” and trade on the New York Stock Exchange under MITT’s current ticker symbol. Additionally, the new REIT will focus primarily on securitizing non-agency residential loans, which will comprise 86% of its investment portfolio. WMC’s legacy commercial investments will only represent 3% of the portfolio on a pro forma basis. The companies also expect significant operating efficiencies of around $5-7 million on an annual basis.
In a statement, T.J. Durkin, who will serve as the CEO of the combined company, commented: “We are very pleased to have reached an agreement to acquire WMC in a combination that presents a compelling, value-maximizing opportunity for both MITT and WMC stockholders. We are confident that combining these highly complementary portfolios will help scale our platform, generate greater operational efficiencies, cost synergies, and accretive earnings growth, and benefit all stockholders. We look forward to moving swiftly to complete this transaction.”
“The merger of MITT and WMC delivers immediate cash value to WMC stockholders as well as allowing our stockholders to continue to participate in the upside of the combined company,” WMC chief executive Bonnie Wongtrakool added. “With the support of Angelo Gordon’s deep credit expertise, resources, and proven track record, we believe MITT is well-positioned to drive long-term value for the combined company in the residential mortgage market. We are committed to working closely with the MITT team to quickly complete the acquisition and deliver substantial value for our stockholders.”
The merger deal is expected to close in the fourth quarter of 2023.
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