New Residential Investment Corp., a U.S. real estate investment trust, bought Home Loan Servicing Solutions Ltd.’s assets for about $1.2 billion, an agreement that replaces a merger announced in February.
New Residential paid $17.08 a share for 71 million shares of Home Loan Servicing Solutions, the companies said in a statement Monday. The total purchase price was about $1.4 billion, including debt, New York-based New Residential said. A prior deal in February called for a takeover at $18.25 a share.
“When it became evident that HLSS was unable to satisfy the merger conditions as originally expected, we worked collaboratively with HLSS management to structure this asset purchase to meet our mutual goals,” New Residential Chief Executive Officer Michael Nierenberg said in the statement, referring to Home Loan Servicing Solutions’ ticker symbol.
Home Loan Servicing Solutions was created by Ocwen Financial Corp. to help finance investments in mortgage-servicing contracts and was taken public in 2012. Earlier this year, investment firm BlueMountain Capital Management LLC said “misconduct” by Ocwen triggered a default in securities issued by a Home Loan Servicing Solutions trust. Home Loan Servicing Solutions said it would “vigorously defend against the claims.”
The sale announced Monday will “enable our shareholders to maximize value for their shares,” Home Loan Servicing Solutions CEO John Van Vlack said in the statement.
New Residential began an offering of 40 million shares of stock, consisting of 11.7 million shares being sold by the company and 28.3 million offered by Home Loan Servicing Solutions. The REIT also said it reached a multiyear extension of servicing contracts with Ocwen.