Hatteras Financial Corp. (HTS) to Be Acquired by Annaly Capital Management in $1.5B Deal

Shares of Hatteras Financial Corp. (HTS) were trading up +1.33 or +9.33 percent to $15.59 per share in Monday’s premarket after news broke early this morning that the company would be taken over by Annaly Capital Management (NLY) for $1.5 billion. Hatteras Financial stock closed at $14.26 per share, down -0.07 or -0.49 percent in Friday’s regular trading session.

Winston-Salem, North Carolina based Hatteras Financial Corp. was founded in 2007 and is a domestic real estate investment trust or REIT.
The company specializes in investing in single family residential mortgage pass-through securities, which are issued and/or guaranteed by a U.S. government agency such as the General National Mortgage Association or GNMA and the Federal Home Loan Mortgage Corporation or FNMA. Hatteras Financial is advised and managed by Atlantic Capital Advisors LLC and is a component of both the Russell 2000 and the Russell 3000 stock indexes.

New York City based Annaly Capital Management Inc. was founded in 1997 by Wall Street veteran Michael A.J. Farrel. The company is a leading real estate investment trust with the principal business objective of generating net income for distribution to shareholders, as well as for the preservation of shareholder capital. Since the company’s founding, Annaly has paid out more than $13 billion in dividends to shareholders through its real estate investments, mostly in agency mortgage backed securities.

The deal, which was announced earlier this morning is for Annaly Capital to acquire Hatteras Financial for cash and stock that values Hatteras at $15.85 per share based on Hatteras’ stock’s closing price on Friday. The consideration is a +24 percent premium over Hatteras’ stock’s 60-day volume weighted average price.

According to the terms of the agreement, a wholly owned subsidiary of Annaly will begin an offer for the acquisition of all of Hatteras outstanding common stock. The second step merger will give Hatteras shareholders three options to choose from: Hatteras shareholders can receive $15.85 in cash, $5.55 in cash and 0.9894 shares of Annaly common stock, or 1.5226 shares of Annaly common stock. Hatteras shareholders that choose the $15.85 cash option will be prorated so that the aggregate amount of the deal comes out to about 65 percent of Annaly common stock and approximately 35 percent in cash.

Michael R. Hough, Chairman and Chief Executive Officer of Hatteras said in the press release that, “We are excited by the opportunity to join the Annaly platform and believe our diversification efforts are greatly enhanced by the industry-leading business Annaly has built. The complementary nature of this transaction should enhance the risk-adjusted value proposition we’ve always strived for.”

Annaly President and Chief Executive Officer Kevin Keyes said, “With the acquisition of Hatteras, we significantly grow our diversified portfolio and broaden our investment options, further fortifying Annaly’s position as the market leading mortgage REIT.”

The transaction was unanimously approved by the boards of both companies and is subject to the customary closing conditions, which includes the tender for exchange of one share more than two thirds of all outstanding Hatteras common shares. The deal is expected to close by the end of the third quarter of this year.

Other News About HTS

Hatteras Financial Corp. Declares First Quarter 2016 Dividends on Shares of Common and Preferred Stock

The $0.45 dividend for the first quarter will be paid on April 22nd to shareholders of record on April 1st.

Hatteras Financial Corp. Earnings Analysis: 2015 By the Numbers

Analysis of the company’s financial results for the year ended on December 31st, 2015.

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Published on Apr 11, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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