CrossCountry wins Two Harbors vote, ending UWM’s takeover fight

Two Harbors Investment Corp. shareholders approved the company’s merger with CrossCountry Mortgage on Thursday, closing out a prolonged takeover battle in which UWM Holdings and its CEO, Mat Ishbia, tried and failed to win the company away from a rival buyer. The vote gives CrossCountry a mortgage servicing rights portfolio that had become the focus of one of the mortgage business’s ugliest recent deal fights.

According to The Real Deal, the contest began in December, when Two Harbors agreed to an all-stock merger with UWM. That agreement grew less attractive as UWM’s share price fell more than 54 percent after the original announcement, reducing the value of its fixed exchange offer and leading Two Harbors to reopen negotiations.

CrossCountry ultimately prevailed with an all-cash proposal valued at $12 per share. UWM responded with a $12.50 cash option, but only for shareholders who chose cash rather than stock. Two Harbors’ board argued that structure made CrossCountry’s lower sticker price the surer outcome because not every investor might elect cash under UWM’s alternative.

The dispute turned increasingly hostile as the bidding continued. UWM repeatedly accused Two Harbors’ leadership of favoring CrossCountry for reasons that did not center on shareholder value. Last month, a group of Two Harbors shareholders filed a proposed class-action lawsuit alleging the board breached its fiduciary duties by walking away from what they described as UWM’s better offer.

After the vote, UWM indicated it was leaving the fight behind while continuing to argue it had offered more. “This chapter of the monthslong saga with Two Harbors is now closed,” a company spokesperson said, adding that UWM believed its proposals were superior despite what it called an unfair sale process.

The result is a setback for Ishbia and UWM, which had pursued the acquisition as a way to expand further into mortgage servicing while higher interest rates continue to weigh on mortgage originations. Servicing rights remain prized because they can produce recurring fee income even when refinancing and home purchases are slower, a dynamic that helps explain why this contest became so heated and why similar assets are likely to keep drawing attention.

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