UWM Holdings, parent of United Wholesale Mortgage, has acquired Two Harbors Investment Corp., a mortgage-servicing real estate investment trust, in an all-stock transaction worth $1.3 billion.
The acquisition forms the eighth largest mortgage servicer nationwide, with a combined $400 billion in mortgage servicing rights, the company announced Wednesday.
Increased cash flow from the deal will be reinvested in UWM's network of mortgage brokers, among other uses, according to the company.
"This transaction is a true win for both stockholders and our mortgage broker partners," UWM Chairman, president and CEO Mat Ishbia. Ishbia said via press statement. "The timing of doubling our servicing book as we bring servicing in-house is the perfect alignment."
UWM, a ubiquitous presence on mortgage-backed securities (MBS) deals is already the country's #1 overall mortgage lender. Bringing Two Harbors' mortgage servicing expertise and capital markets record inhouse gives the Pontiac, Mich.-based company access to a high-quality mortgage-servicing rights portfolio worth $176 billion, UWM said.
The deal is also expected to create recurring revenues and annual cost and revenue synergies worth $150 billion, according to the company statement.
Two Harbors' stockholders will receive a fixed exchange ratio of 2.33 shares of UWMC class C common stock for each share of TWO common stock, an exchange that represents a share value of $11.94 per share, based on UWM's December 16 closing price. It includes a premium of 21% the volume weighted average price of TWO's common stock for the 30 days ended on December 16, UWM said.
