Annaly Capital Management’s $900 Million Acquisition of MTGE Investment

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.

Annaly Capital Management, Inc. (NYSE:NLY) and MTGE Investment Corp. (Nasdaq:MTGE) signed 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”).

Cooley advised MTGE Investment with a team led by Tom Salley (Picture) and Kevin Mills.

Involved fees earner: Thomas Salley – Cooley LLP; Kevin Mills – Cooley LLP; Aaron Binstock – Cooley LLP; Kerry Killeen – Cooley LLP; Matthew Silverman – Cooley LLP; Sunny Chang – Cooley LLP; Jason Drory – Cooley LLP; Kevin Gibson – Cooley LLP; Lesse Castleberry – Cooley LLP; Chris Mayer-Dempsey – Cooley LLP; David Walsh – Cooley LLP; Stacy Crosnicker – Cooley LLP; Koji Fukumura – Cooley LLP; Peter Adams – Cooley LLP; Sarah Lightdale – Cooley LLP; Jacqueline Grise – Cooley LLP; Sharon Connaughton – Cooley LLP;

Law Firms: Cooley LLP;

Clients: MTGE Investment Corp;

Author: Ambrogio Visconti