NEW YORK--(BUSINESS WIRE)--
Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the “Company”)
announced today that it has reached a definitive agreement with CreXus
Investment Corp. (NYSE: CXS) (“CreXus”) to acquire for $13.00 per share
in cash (plus a payment in lieu of a prorated dividend) all the shares
of CreXus that Annaly does not currently own.
CreXus has approximately 76,630,528 shares of common stock outstanding,
of which Annaly holds 9,527,778 shares, or approximately 12.4%. The
transaction values CreXus at $996 million and represents a total
consideration paid by Annaly of $872 million.
“This transaction represents a significant step toward Annaly’s
commitment to investing directly in commercial real estate assets,” said
Wellington Denahan, Annaly’s Chairman and Chief Executive Officer. “We
believe that wholly owning the commercial real estate platform we
currently manage through FIDAC is complementary to our existing business
and return profile and should provide stable and diversified
risk-adjusted returns to our shareholders.
“This transaction is part of a broad evolution of our capital allocation
strategy. Certain highlights include:
-
Immediately accretive - All cash offer, which is immediately
accretive to both our taxable earnings and our dividends per share
-
Portfolio diversification - Strategic benefit of the
acquisition given our existing asset management expertise and the
resultant diversification of our investment portfolio
-
Scalable platform - Commercial platform is highly scalable when
combined with Annaly’s broad capital base
“Our commercial real estate expertise, as well as our capabilities in
other asset classes, are valuable strategic tools, and we look forward
to updating the market on our portfolio as it evolves.”
AGREEMENT TERMS
The merger agreement has been approved by the CreXus Board of Directors,
acting in accordance with a unanimous recommendation by a Special
Committee of the CreXus Board consisting entirely of directors who are
not employees of Annaly or any of its subsidiaries, including Fixed
Income Discount Advisory Company (“FIDAC”), a wholly owned subsidiary of
Annaly that manages CreXus under a management contract. Under the terms
of the merger agreement, Annaly will make a tender offer for all
outstanding shares of common stock of CreXus it does not already own at
$13.00 per share in cash, plus a cash payment per share to reflect a
pro-rated quarterly dividend for the quarter in which the tender offer
is closed. If a majority of the shares that are not owned by Annaly or
its affiliates are properly tendered and not withdrawn, Annaly will
purchase the tendered shares and will complete the acquisition of CreXus
through a merger, by which CreXus will become a wholly owned subsidiary
of Annaly and CreXus shareholders who do not tender their shares in
response to the tender offer will receive the same consideration they
would have received if they had tendered their shares.
Under the Merger Agreement, Annaly’s tender offer will not begin until
after a 45 day period during which CreXus will be able to seek alternate
purchasers who would be willing to purchase control of CreXus or its
assets on terms that the Special Committee determines to be more
favorable to CreXus and its stockholders than those on which Annaly has
agreed to purchase the CreXus shares it does not own.
The announced transaction follows a proposal Annaly made on November 9,
2012 to acquire all the CreXus shares it does not already own for $12.50
per share. The increase in the price Annaly will pay resulted from
negotiations between Annaly and the Special Committee of CreXus
directors.
The price of $13.00 per share in cash represents approximately a 17.1%
premium both to CreXus’ last reported share price on November 9, 2012,
the last trading day before Annaly’s announcement of its proposal to
acquire all the CreXus shares it does not already own, and to the
weighted average trading price of CreXus shares during the 30 trading
days ended on November 9, 2012. The $13.00 price represents
approximately a 9% premium to CreXus’ common stock book value per share
on September 30, 2012 and a 7% premium to its reported fair value per
share as of that date. The merger agreement does not contain any
financing condition but does contain customary conditions to the
obligations to purchase the shares tendered in response to the tender
offer. Annaly’s right to accept the tendered shares or to do the merger
is conditioned on a majority of the shares not owned by Annaly or its
affiliates being properly tendered in response to the tender offer and
not withdrawn.
Advisors
BofA Merrill Lynch is acting as financial advisor and K&L Gates LLP is
acting as legal advisor to Annaly in connection with this transaction.
About Annaly Capital Management, Inc.
Annaly’s principal business objective is to generate net income for
distribution to investors from its investment securities and from
dividends it receives from its subsidiaries. Annaly is a Maryland
corporation that has elected to be taxed as a real estate investment
trust (“REIT”).
About CreXus Investment Corp.
CreXus (NYSE: CXS) is a specialty finance company that acquires, manages
and finances, directly or through its subsidiaries, commercial mortgage
loans and other commercial real estate debt, commercial mortgage-backed
securities and other commercial real estate-related assets. CreXus’
principal business objective is to generate net income for distribution
to investors from the spread between the yields on its investments and
the cost of borrowing to finance their acquisition and secondarily to
provide capital appreciation. CreXus, a Maryland corporation that has
elected to be taxed as a REIT, was formed by Annaly in 2009 and is
externally managed by FIDAC, which is a wholly-owned subsidiary of
Annaly. Each of CreXus’ officers is an employee of Annaly or FIDAC.
News Release Not an Offer
This news release is not the commencement of the tender offer described
above and is not otherwise an offer to purchase, or a solicitation of
offers to sell, CreXus shares. Any tender offer will be made by means of
an Offer to Purchase, which will be accompanied by a means to tender
CreXus common stock.
This news release and our public documents to which we refer contain or
incorporate by reference certain forward-looking statements which are
based on various assumptions (some of which are beyond our control) may
be identified by reference to a future period or periods or by the use
of forward-looking terminology, such as "may," "will," "believe,"
"expect," "anticipate," "continue," or similar terms or variations on
those terms or the negative of those terms. Actual results could differ
materially from those set forth in forward-looking statements due to a
variety of factors, including, but not limited to, changes in interest
rates; changes in the yield curve; changes in prepayment rates; the
availability of mortgage-backed securities for purchase; the
availability of financing and, if available, the terms of any
financings; changes in the market value of our assets; changes in
business conditions and the general economy; our ability to consummate
the transaction and integrate the commercial mortgage business; our
ability to consummate any contemplated investment opportunities; risks
associated with the businesses of our subsidiaries, including the
investment advisory business of our wholly-owned subsidiaries,
including: the removal by clients of assets managed, their regulatory
requirements, and competition in the investment advisory business; risks
associated with the broker-dealer business of our wholly-owned
subsidiary; changes in government regulations affecting our business;
our ability to maintain our qualification as a REIT for federal income
tax purposes; and our ability to maintain our exemption from
registration under the Investment Company Act of 1940, as amended. For a
discussion of the risks and uncertainties which could cause actual
results to differ from those contained in the forward-looking
statements, see "Risk Factors" in our most recent Annual Report on Form
10-K and any subsequent Quarterly Reports on Form 10-Q. We do not
undertake, and specifically disclaim any obligation, to publicly release
the result of any revisions which may be made to any forward-looking
statements to reflect the occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.
Annaly Capital Management, Inc.
Investor Relations, 888-8Annaly
Source: Annaly Capital Management, Inc.