ITEM 2.01
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COMPLETION OF AN ACQUISITION OR DISPOSITION.
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On September 7, 2018, Annaly Capital Management, Inc. (Annaly) completed the previously announced acquisition of MTGE pursuant to the
Agreement and Plan of Merger (the Merger Agreement), dated as of May 2, 2018, by and among Annaly, MTGE and Mountain Merger Sub Corporation, a Maryland corporation and wholly-owned subsidiary of Annaly (Purchaser).
As previously disclosed and pursuant to the Merger Agreement, on May 16, 2018, Purchaser and Annaly commenced an exchange offer (the Offer)
to purchase all of MTGEs issued and outstanding shares of common stock, par value $0.01 per share (the MTGE Common Stock or such shares, the MTGE Common Shares). In the Offer, subject to the terms and conditions and
limitations set forth in the Merger Agreement, each MTGE Common Share accepted by Purchaser was exchanged for the right to receive, at the election of the holder thereof (subject to the proration procedures described in the Merger Agreement):
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$9.82 in cash and 0.9519 shares of Annaly common stock (the Mixed Consideration);
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$19.65 in cash (the Cash Consideration); or
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1.9037 shares of Annaly common stock (the Stock Consideration).
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Holders of MTGE Common Stock who tendered into the Offer but did not make a valid election received the Mixed Consideration for their MTGE Common Shares.
The Offer expired at 7:00 a.m., Eastern Time, on September 7, 2018 (the Expiration Time). As of the Expiration Time, a total of 34,632,768
MTGE Common Shares had been validly tendered and not validly withdrawn pursuant to the Offer, representing approximately 75.62% of the issued and outstanding MTGE Common Shares. Purchaser accepted for payment and exchange all such MTGE Common Shares
validly tendered and not validly withdrawn.
On September 7, 2018, pursuant to the terms of the Merger Agreement and in accordance with
Section 3-106.1
of the Maryland General Corporation Law, MTGE merged with and into Purchaser (the Merger), with Purchaser continuing as the surviving corporation. At the effective time of the Merger
(the Effective Time), each MTGE Common Share that was outstanding immediately prior to the Effective Time and not tendered pursuant to the Offer was converted into the right to receive (i) the Mixed Consideration, (ii) the Cash
Consideration or (iii) the Stock Consideration, subject in each case to the election procedures and to the proration procedures described in the Merger Agreement.
At the Effective Time, each share of MTGE 8.125% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (MTGE Preferred Stock),
that was outstanding as of immediately prior to the Effective Time was converted into one share of Annaly 8.125% Series H Cumulative Redeemable Preferred Stock, par value $0.01 per share (Annaly Series H Preferred Stock), which has the
rights, preferences, privileges and voting powers substantially the same as MTGE Preferred Stock immediately prior to the Effective Time. The foregoing descriptions of the Offer, the Merger and the Merger Agreement are qualified in their entirety by
reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and incorporated herein by reference.
A copy of the Merger Agreement
has been included as an exhibit hereto to provide investors with information regarding its terms. It is not intended to provide any other factual information about Annaly or MTGE. In particular, the assertions embodied in the representations and
warranties contained in the Merger Agreement are qualified by information in confidential disclosure letters provided by each of MTGE and Annaly to each other in connection with the signing of the Merger Agreement or in filings of the parties with
the SEC. These confidential disclosure letters contain information that modifies, qualifies and creates