- Strategic Transaction is Mutually Beneficial to Shareholders of
Both Companies
- Enhances the Scale and Diversification of Annaly’s Unrivaled
Investment Platform
- Accretive to Annaly’s Core Earnings Per Share of Common Stock and
Aligns with Annaly’s Current Risk Profile and Capital Allocation
Strategy
- Provides Immediate and Tangible Cost Savings to Shareholders
- Increased Equity Base and Access to Capital Supports Continued
Growth
- Reinforces Annaly’s Stature as a Market Leader and Industry
Consolidator
- MTGE Shareholders to Have a Cash / Stock Election with Aggregate
Transaction Consideration to Consist of Approximately 50% Annaly
Shares and Approximately 50% Cash
- Transaction Expected To Close During the Third Quarter of 2018
NEW YORK & BETHESDA, Md.--(BUSINESS WIRE)--
Annaly Capital Management, Inc. (“Annaly”) (NYSE:NLY) and MTGE
Investment Corp. (“MTGE”) (Nasdaq:MTGE) today announced the signing of a
definitive merger agreement under which Annaly will acquire MTGE for
consideration to be paid in cash and shares of Annaly common stock,
which values MTGE at $19.65 per share of MTGE common stock based upon
the closing price of Annaly common stock on April 30, 2018. The value of
the consideration represents a premium of approximately 12% to the
60-day volume-weighted average price of MTGE common stock ending on
April 30, 2018.
Subject to the terms and conditions of the merger agreement, a
wholly-owned subsidiary of Annaly will commence an exchange offer to
acquire all outstanding shares of MTGE common stock. For each share of
MTGE common stock validly tendered in the exchange offer or converted
pursuant to the second-step merger described below, MTGE shareholders
may elect to receive: (a) $9.82 in cash and 0.9519 shares of Annaly
common stock; (b) $19.65 in cash (the “Cash Consideration Option”); or
(c) 1.9037 shares of Annaly common stock (the “Stock Consideration
Option”). MTGE shareholders who elect the Cash Consideration Option or
Stock Consideration Option will be subject to proration, in each of the
exchange offer and the subsequent second step merger, so that the
aggregate consideration will consist of approximately 50% of Annaly’s
common stock and approximately 50% in cash. In addition to the above
consideration, Annaly would assume the existing notional $55 million in
MTGE 8.125% Series A cumulative redeemable preferred stock.
The transactions contemplated by the merger agreement, including the
exchange offer and the merger, have been approved by the Board of
Directors of Annaly and approved by the Board of Directors of MTGE upon
the recommendation of the Special Committee of the MTGE Board of
Directors, which is comprised entirely of independent directors (the
“MTGE Special Committee”).
“This transaction is another milestone in Annaly’s successful history as
a disciplined, market leading consolidator,” commented Kevin Keyes,
Chairman, CEO and President of Annaly. “The acquisition of MTGE adds
complementary assets across three of our four businesses, deepens the
breadth of our investment alternatives, is accretive to earnings and
provides immediate cost savings and efficiencies to shareholders. This
strategic acquisition further enhances our capital base to support
continued growth of our investment platforms and creates tremendous
value for both of our companies’ shareholders. This marks our third
transformative acquisition and solidifies Annaly’s position as the
market leader in our industry.”
Randy Dobbs, Chairman and Lead Independent Director of MTGE, said: “We
are excited to have reached an agreement with Annaly for the sale of our
company and expect that our shareholders will benefit from the increased
diversification, scale and liquidity of the Annaly platform.”
Transaction Highlights
- Enhances the scale, liquidity and access to capital of Annaly’s
platform: A pro-forma equity base of over $14 billion supports the
continued growth of all investment businesses
- Increases investment diversification and optionality: MTGE’s
portfolio, which consists of agency and non-Agency residential
mortgage backed securities and investments in triple net-leased
healthcare real estate, is complementary to Annaly’s existing
businesses and expands the number of investment options to 37,
furthering Annaly’s ability to pivot as market dynamics change. Pro
forma for the transaction, Annaly will have 27% of its capital
allocated to credit assets
- Accretive to earnings: Transaction is expected to be accretive
to Annaly’s core earnings per share in 2018 and is aligned with
Annaly’s current risk profile and capital allocation strategy
- Enables MTGE shareholders to benefit from a more efficient
operating platform: Through ownership of Annaly common stock
received in conjunction with the transaction, MTGE’s shareholders will
benefit from significant and tangible cost efficiencies generated by
Annaly’s scalable operating model as well as participate in upside of
shares of Annaly stock
- Reinforces Annaly’s stature as industry leader: Acquisition of
MTGE further reinforces Annaly as the largest and most liquid
diversified mortgage REIT in the world and would represent Annaly’s 3rd
successful acquisition since 2013, with a combined value of
approximately $3.3 billion
- Provides a meaningful premium to MTGE’s common stock price: The
value of the consideration represents a premium of approximately 12%
to the 60-day volume-weighted average price of MTGE’s common stock
ending on April 30, 2018 based upon the closing price of Annaly common
stock on April 30, 2018
- MTGE shareholders may elect between cash and stock consideration or
a combination of both: MTGE shareholders will have an ability to
elect between cash and stock consideration (or a combination of both
cash and stock consideration), subject to proration rules such that
the aggregate transaction consideration will consist of approximately
50% of Annaly’s common stock and approximately 50% in cash
Prior to closing, each of Annaly and MTGE will declare for their
respective shareholders a pro rata common dividend based on its last
regular quarterly dividend declared prior to closing and the number of
days elapsed since the record date for the most recent quarterly
dividend, as of the day immediately prior to the closing date.
The exchange offer is subject to customary closing conditions, including
the tender for exchange of a majority of all then outstanding shares of
MTGE common stock when added to any shares of MTGE common shares owned
by Annaly and its wholly-owned subsidiary. Following completion of the
exchange offer, the parties will promptly effect a second-step merger
without the approval of MTGE shareholders under Maryland law pursuant to
which all remaining shares of MTGE common stock not tendered in the
exchange offer will be converted into the right to receive the same
consideration as in the exchange offer, with the same election options
and subject to the same proration rules. The transaction is expected to
close during the third quarter of 2018.
Wells Fargo Securities, LLC and Sandler O’Neill + Partners, L.P. served
as financial advisors to Annaly, and Wachtell, Lipton, Rosen & Katz
served as legal counsel to Annaly. Barclays Capital Inc. served as
financial advisor to the MTGE Special Committee, and Cooley LLP served
as legal counsel to the MTGE Special Committee.
Conference Call
Annaly will hold a conference call on May 3, 2018 at 10:00 A.M. Eastern
Time to discuss this transaction and Annaly’s quarterly earnings. The
number to call is 888-317-6003 for domestic calls and 412-317-6061 for
international calls. The conference passcode is 5191574. There will also
be an audio webcast of the call on www.annaly.com.
If you would like to be added to the e-mail distribution list, please
visit www.annaly.com,
click on Investor Relations, then select Email Alerts and complete the
email notification form.
About Annaly
Annaly is a leading diversified capital manager that invests in and
finances residential and commercial assets. Annaly’s principal business
objective is to generate net income for distribution to its shareholders
and to preserve capital through prudent selection of investments and
continuous management of its portfolio. Annaly has elected to be taxed
as a real estate investment trust, or REIT, for federal income tax
purposes. Annaly is externally managed by Annaly Management Company LLC.
Additional information about Annaly can be found at www.annaly.com.
About MTGE Investment Corp.
MTGE Investment Corp. is a real estate investment trust that invests in
and manages a leveraged portfolio of agency mortgage investments,
non-agency mortgage investments and other real estate-related
investments. The company is externally managed and advised by MTGE
Management, LLC, an affiliate of AGNC Investment Corp. (Nasdaq: AGNC).
For further information, please refer to www.mtge.com.
Forward-Looking Statements
This communication includes forward-looking statements. These
forward-looking statements generally can be identified by phrases such
as “will,” “expects,” “anticipates,” “foresees,” “forecasts,”
“estimates” or other words or phrases of similar import. Similarly,
statements herein that describe the proposed transaction, including its
financial and operational impact, and other statements of management’s
beliefs, intentions or goals also are forward-looking statements. It is
uncertain whether any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do, what impact
they will have on the results of operations and financial condition of
the combined companies or the price of Annaly or MTGE stock. These
forward-looking statements involve certain risks and uncertainties, many
of which are beyond the parties’ control, that could cause actual
results to differ materially from those indicated in such
forward-looking statements, including but not limited to the ability of
the parties to consummate the proposed transaction on a timely basis or
at all and the satisfaction of the conditions precedent to consummation
of the proposed transaction, including a majority of MTGE’s common
shares being validly tendered into the exchange offer; that required
regulatory approvals for the proposed transaction may not be obtained in
a timely manner, if at all; business disruption following completion of
the merger; and the other risks and important factors contained and
identified in Annaly’s and MTGE’s filings with the Securities and
Exchange Committee (“SEC”), including their respective Quarterly Reports
on Form 10-Q and Annual Reports on Form 10-K, any of which could cause
actual results to differ materially from the forward-looking statements.
The forward-looking statements included in this communication are made
only as of the date hereof. Neither Annaly nor MTGE undertakes any
obligation to update the forward-looking statements to reflect
subsequent events or circumstances, except as required by law.
Additional Information and Where to Find It
The exchange offer referenced in this communication has not yet
commenced. This communication is for informational purposes only and is
neither an offer to purchase nor a solicitation of an offer to sell
shares, nor is it a substitute for the exchange offer materials that
Annaly and its merger subsidiary will file with the SEC. At the time the
exchange offer is commenced, Annaly and its merger subsidiary will file
a tender offer statement on Schedule TO, Annaly will file a registration
statement on Form S-4 and MTGE will file a Solicitation/Recommendation
Statement on Schedule 14D-9 with the SEC with respect to the exchange
offer. THE OFFER MATERIALS (INCLUDING AN OFFER TO EXCHANGE, A RELATED
LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT
INFORMATION. MTGE SHAREHOLDERS ARE URGED TO READ THESE DOCUMENTS
CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION THAT HOLDERS OF MTGE SECURITIES SHOULD CONSIDER BEFORE
MAKING ANY DECISION REGARDING EXCHANGING THEIR SECURITIES. The Offer to
Exchange, the related Letter of Transmittal and certain other exchange
offer documents, as well as the Solicitation/Recommendation Statement,
will be made available to all holders of MTGE common stock at no expense
to them. The exchange offer materials and the
Solicitation/Recommendation Statement will be made available for free at
the SEC’s website at www.sec.gov.
Additional copies may be obtained for free by contacting Annaly’s
Investor Relations department at 1-888-8Annaly (1-888-826-6259).
In addition to the Offer to Exchange, the related Letter of Transmittal
and certain other exchange offer documents, as well as the
Solicitation/Recommendation Statement, Annaly and MTGE file annual,
quarterly and current reports and other information with the SEC. You
may read and copy any reports or other information filed by Annaly and
MTGE at the SEC public reference room at 100 F Street, N.E., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Annaly’s and MTGE’s filings
with the SEC are also available to the public from commercial
document-retrieval services and at the website maintained by the SEC at http://www.sec.gov.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180502006781/en/
Annaly Capital Management, Inc.
Investor Relations
1-888-8Annaly
www.annaly.com
Source: Annaly Capital Management, Inc.