AG Mortgage Investment Trust has recently announced its acquisition of Western Asset Mortgage Capital in a definitive merger agreement. This move solidifies AG Mortgage's position as a prominent player in the residential mortgage real estate investment trust industry.
The acquisition will be conducted through a fixed exchange ratio stock/cash deal. At the closing of the deal, each share of Western Asset Mortgage will be converted into the right to receive 1.5 shares of AG Mortgage. This exchange will result in a total of 9.2 million shares, along with other negotiated terms.
Following the merger, AG Mortgage shareholders will hold approximately 69% of the combined company's stock. The remaining portion will be held by Western Asset Mortgage shareholders. This distribution reflects the shared value and potential benefits of both companies joining forces.
Transaction Value and Premium
AG Mortgage has determined that the closing price of its common stock on August 7 implies a transaction value of $11.23 per share of common stock. This includes a stock consideration of $10.11 per share and a cash consideration of $1.12 per share. The offer represents an impressive 34% premium when compared to Western Asset Mortgage's unaffected stock price at the closing on July 12.
Leadership and Governance
T.J. Durkin, CEO of AG Mortgage, will continue to serve as the CEO of the combined company. The entity will retain the name AG Mortgage Investment Trust and operate under the management of AG REIT Management. The board of directors will expand from six to eight members to include two Western Asset Mortgage designated directors.
This merger has received approval from both companies' boards and external managers. The transaction is expected to close in the fourth quarter, bringing together the valuable expertise and resources of AG Mortgage Investment Trust and Western Asset Mortgage Capital.