Ellington Financial Inc. (NYSE : EFC) entered into an agreement to acquire Great Ajax Corp. (NYSE : AJX) for $180 million on June 30, 2023. Pursuant to the merger agreement terms, each share of Great Ajax common stock will be converted into 0.5308 shares of Ellington Financial common stock. The combined company will operate as ?Ellington Financial Inc.? and its shares will continue to trade on the NYSE under Ellington Financial?s current ticker symbol, ?EFC.? Ellington Financial Management LLC, an affiliate of Ellington Management Group, L.L.C., will continue to manage the combined company. Upon completion of the transaction, Ellington Financial's Chief Executive Officer and President, Laurence Penn, will continue to lead the combined company, and Ellington Financial executives Michael Vranos, Mark Tecotzky, and JR Herlihy will remain in their current roles. The combined company will remain headquartered in Old Greenwich, Connecticut. In the event of a termination of the merger agreement under certain circumstances, including a change of recommendation by the Great Ajax board of directors regarding the merger or Great Ajax?s acceptance of a superior proposal, Great Ajax would be required to pay EFC a termination fee of $6.9 million.

The transaction has been unanimously approved by the Boards of Directors of Ellington Financial and Great Ajax. The Board of Directors of Great Ajax formed a Special Committee comprised of independent directors to review the transaction and make a recommendation to the Board of Directors of Great Ajax. The transaction was unanimously recommended by the Special Committee. The transaction is subject to approval by Great Ajax?s stockholders, effectiveness of a registration statement on Form S-4 to register the issuance of Ellington Financial Inc. (EFC) Common Stock in connection with the merger, the approval for listing on the New York Stock Exchange as of, subject to official notice of issuance, or prior to immediately following the Effective Time of the shares of EFC common stock that will be issued in connection with the merger, , the respective representations and warranties of the parties being true and correct, subject to the materiality standards and other qualifiers contained in the merger agreement, each party?s compliance in all material respects with their respective covenants and agreements set forth in the merger agreement, the absence of a material adverse effect with respect to either Great ajax or EFC, the receipt by each party of (1) an opinion from the counterparty?s legal counsel that such counterparty has been organized and operated in conformity with the requirements for qualification and taxation as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2019, and (2) a tax opinion from such party?s own legal counsel that the merger will qualify as a ?reorganization? within the meaning of Section 368(a) of the Code, (h) the ( 1) entry by Great ajax and Great ajax?s external manager into an amendment to the Third amended and Restated management agreement, dated as of April 28, 2020, by and among Great ajax, Great ajax OP and the Great ajax manager providing for, among other things, (i) the termination of the Great ajax management agreement prior to Closing, (ii) the payment of the termination fee and reimbursement of all reimbursable expenses under the Great ajax management agreement to the Great ajax manager prior to the Closing, (iii) the Great ajax manager to deliver, or cause its affiliates to deliver, to Great ajax or EFC prior to the Closing all material contracts and material records pertaining to the business or operations of Great ajax and in the Great ajax manager?s or any of its affiliates? possession or control and (iv) a customary release of claims, and (2) valid termination of the Great ajax management agreement; (i) the completion of the Great ajax Preferred Stock Redemptions and the Great ajax Warrant Purchases in all respects; (j) the obtaining and delivery to EFC of certain consents; (k) the entry by Great ajax, EFC and Great ajax?s affiliated servicer into an assignment agreement providing for the assignment of the rights and obligations of Great ajax under the Servicing agreement (as defined in the merger agreement) to EFC in order for the Servicer to continue as the mortgage servicer for each of the mortgage loans owned by Great ajax and any of its subsidiaries immediately prior to the Closing Date and serviced by the Servicer immediately prior to the date on which the Closing occurs so long as EFC or any of its affiliates maintains an ownership interest in such loan; and (l) the delivery of certain certificates and shall maintain, at all times, a minimum cash balance equal to or greater than $30 million. The transaction is expected to close by year-end 2023.

Stephen Pollock and Keith Meyers of Keefe, Bruyette & Woods, A Stifel Company acted as financial advisor and Daniel LeBey and Stancell Haigwood of Vinson & Elkins acted as legal advisor to Ellington Financial. Brian Wornow, Thomas Howland, Jimmy Chang, Sebastian Calmet and Pierce Fowler of Piper Sandler & Co. acted as financial advisor and opinion provider and Andrew J. Noreuil, Brian Hirshberg and Anna Pinedo of Mayer Brown LLP acted as legal advisor to Great Ajax. BTIG, LLC acted as financial advisor and opinion provider to the special committee and Richard Friedman and John Hempill of Sheppard Mullin LLP acted as legal advisors to the special committee. Kendal A. Sibley of Hunton Andrews Kurth LLP acted as legal advisor to Ellington Financial Inc. (NYSE:EFC).

Ellington Financial Inc. (NYSE : EFC) cancelled the acquisition of Great Ajax Corp. (NYSE : AJX) on October 20, 2023. Ellington Financial paid a termination fee of $5 million to Great Ajax. The termination was approved by both companies? boards of directors after careful consideration of the proposed merger and the progress made towards completing the proposed merger.