Annaly Capital Management Inc. (NYSE: NLY) announced to buy Hatteras Financial Corp. (NYSE: HTS) for $1.5 billion, aiming to diversity its portfolio.
Annaly Capital will pay Hatteras Financial using a combination of cash and its own shares. Hatteras Financial shareholders have the option of receiving $5.55 in cash and 0.9894 shares of Annaly stock, or $15.85 in cash or 1.5226 shares of Annaly stock. The deal will value Hatteras shares at $15.85 a share, representing a premium of 11 percent over Hatteras Friday’s close and 24 percent over the 60-day volume-weighted average price.
“This strategic transaction represents a unique and sizeable value-creation opportunity for our shareholders,” Kevin Keyes, chief executive officer and president of New York-based Annaly, said in the statement. “With the acquisition of Hatteras, we significantly grow our diversified portfolio and broaden our investment options.”
The deal will help Annaly diversity its portfolio holding. Both companies are real estate investment trust that owns and manage mortgage debt. The difference is that most of Annaly’s holding is fixed-rate securities, while three-quarters of Hatteras Financial’s portfolio was in adjustable-rate securities.
The transaction has been unanimously approved by the boards of both companies and is expected to close by the end of the third quarter of 2016.
Annaly Capital shares are down 0.19 percent to $10.39 at 2:49 p.m. in New York, while Hatteras shares jump 10.76 percent to $15.80.