Annaly Capital Management, Inc. Announces Agreement to Acquire CreXus
NEW YORK -- January 31, 2013
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.”
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.
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
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