UWM challenges Two Harbors board over rejection of $12 per share bid

UWM Holdings Corp. is challenging Two Harbors Investment Corp.’s board after it rejected a UWM pushed back on the board’s description of closing risks, including references to potential balance sheet “erosion” and concerns about UWM’s credibility because its proposals have been accompanied by litigation threats. 

The bidder called the board’s stance “disingenuous,” noting that the same directors had recommended a transaction with UWM in December, “including by highlighting the ability to achieve necessary approvals.”

Two said UWM claimed the deal could close within two to three months of signing, but state regulatory requirements for change-of-control approvals mandate at least 120 days of advance notice, making the timeline unrealistic.

The Pontiac, Michigan-based wholesale lender said its offer is supported by a committed, unsecured $1.3 billion bridge facility from Mizuho Bank Ltd. “with no ratings trigger, no borrowing-base test, and no market contingency.” To address concerns raised by Two Harbors, UWM said “Mizuho has agreed to remove the customary due diligence condition that the TWO Board raised concerns about.”

“This is more than can be said for CrossCountry’s financing, which still contains scant details even in the most recent announcement and the Board deliberately fails to provide any details about it for obvious reasons,” UWM said.

UWM characterized the actions of the Two Harbors board as “egregious” and said they demonstrate the board “does not deserve TWO stockholder support for an inferior deal.”

“UWMC is assessing its options to make sure TWO stockholders are able to obtain the value they deserve,” the company added.

Flávia Furlan Nunes reported and wrote this article with drafting assistance from HousingWire Automation, an editorial tool that helps transform announcements and industry data into HousingWire-style news coverage.