Two Harbors Deal Nears Completion, Stub Dividend Formula Updated

Two Harbors Investment Corp. has achieved state and agency approvals for its acquisition by CrossCountry Intermediate Holdco LLC (CCM), with only one state's approval remaining pending. This development necessitates an update to the previously estimated "stub period" dividend for common shareholders, which is tied to the merger's closing timeline. Initially, the companies projected a stub dividend of $0.12196 per share, based on an anticipated August 3 closing date. However, due to the revised closing schedule, the dividend amount will now be recalculated to reflect the actual closing date. The updated formula dictates that the stub dividend will equal Two Harbors' most recent quarterly dividend of $0.34 per share, multiplied by the number of days from the end of the second quarter of 2026 through the day preceding the merger's closure, and then divided by the 92 days in the third quarter of 2026. This dividend will be disbursed to shareholders of record on the last trading day immediately prior to the merger's effective time and will be paid concurrently with the merger consideration. The company explicitly stated in its filing that the stub dividend will not impact or reduce the merger consideration provided to Two Harbors shareholders. A representative for CCM declined to comment on the matter. Two Harbors initially announced the agreement with CCM earlier this year, positioning it as a strategic initiative to integrate its mortgage asset portfolio with a substantial retail origination and servicing platform. The acquisition, if finalized as planned, is valued at approximately $1.26 billion. This figure reflects an increase from the initial bid, following a competitive public bidding process involving United Wholesale Mortgage (UWM), which raised the overall price by approximately $126 million. CCM progressively increased its cash offer, starting from $10.80 per share in March, escalating to $11.30 in April, and further to $12 per share in May, which also incorporated a dividend component. The current acquisition price represents a 19% premium over Two Harbors' tangible book value at the end of March. In 2025, CCM originated $51 billion in mortgages, ranking it as the seventh-largest originator in the market.