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.