NEW YORK CITY-CreXus Investment Corp. and Annaly Capital Management said Thursday that they’d entered an agreement for Annaly to acquire the outstanding shares of CreXus stock it doesn’t currently own. The $872-million cash deal values CreXus at $996 million.
In a statement, Wellington Denahan, Annaly’s chairman and CEO, says the acquisition represents “a significant step toward Annaly’s commitment to investing directly in commercial real estate assets. We believe that wholly owning the commercial real estate platform we currently manage through FIDAC”— Fixed Income Discount Advisory Co., a wholly owned subsidiary of Annaly that manages CreXus under a management contract—is complementary to our existing business and return profile and should provide stable and diversified risk-adjusted returns to our shareholders.” Based in New York City, Annaly is currently the nation’s largest mortgage REIT.
Under the terms of the agreement, New York City-based CreXus may solicit and negotiate alternative proposals from other potential buyers between now and March 16. A special committee consisting of CreXus’ three independent directors will actively solicit offers during the 45-day period.
This past November, Annaly offered to buy all the CreXus shares it didn’t already own for $12.50 per share. The deal announced Thursday increases the per-share price to $13.
In announcing the offer in November, Denahan said that although Annaly remained committed to the agency market, “given the current environment, we believe it is prudent to diversify a portion of our investment portfolio. Therefore, we may allocate up to 25% of our shareholders’ equity to real estate assets other than agency mortgage-backed securities.”
Lazard is acting as independent financial advisor and Goodwin Procter LLP is acting as independent legal advisor to CreXus in connection with this transaction. For Annaly, Bank of America Merrill Lynch is acting as financial advisor and K&L Gates LLP is acting as legal advisor.