Two Harbors Bidding War Escalates; Shares Surge

(TWO) announced CrossCountry Mortgage (CCM) submitted a superior acquisition offer of $10.70 per share in cash, plus a $25.4 million termination fee, surpassing its prior $1.3 billion all-stock merger agreement with UWM Holdings Corp. (UWMC), and also disclosed a third unsolicited $10.75 per share cash bid.

Two Harbors shares surged over 7% on Monday, reaching an over one-month high of $11.50, closing up 6.4% at $11.40. The company confirmed the CCM proposal is superior to the December all-stock merger with UWMC, which aimed to nearly double UWMC's mortgage servicing rights portfolio.

UWMC retains the right to propose revised terms by Wednesday, March 25, and discussions between Two Harbors and UWMC are currently underway. The unsolicited third-party offer includes $10.75 per share in cash, along with payment of the termination fee.

This bidding activity reflects the ongoing consolidation within the U.S. mortgage industry, where lenders seek greater scale to counter the impact of high interest rates on refinancing activity and earnings. Two Harbors, a Minnesota-based real estate investment trust, has approximately 105 million shares outstanding, representing a current market capitalization of about $1.2 billion.