Ready Capital Corporation (NYSE:RC) entered into a definitive merger agreement to acquire Anworth Mortgage Asset Corporation (NYSE:ANH) for approximately $290 million on December 6, 2020. Under the terms of the merger agreement, each share of Anworth common stock will be converted into 0.1688 shares of Ready Capital common stock and $0.61 of cash consideration. The implied offer price is $2.94 per share. Pursuant to the agreement, Ready Capital will combine with Anworth. Upon the closing of the merger, Ready Capital stockholders are expected to own approximately 76% of the combined company's stock, while Anworth stockholders are expected to own approximately 24% of the combined company's stock. Ready Capital will also assume Anworth's three outstanding series of preferred stock including $46.5 million of existing Series A preferred stock, $19.5 million of Series B preferred, and $48.6 million of Series C preferred. In certain circumstances, including a change of recommendation or, in the case of Anworth, the acceptance of an Anworth superior proposal, Ready Capital or Anworth, as applicable, would be required to pay the other party a termination fee of $15 million.

The combined company will operate under the name Ready Capital and its shares are expected to continue trading on the New York Stock Exchange under the existing ticker symbol “RC”. The combined company will be headquartered in New York, New York. Upon completion of the merger, Ready Capital's Chairman and Chief Executive Officer Thomas Capasse will lead the company and Ready Capital executives Jack Ross, Thomas Buttacavoli, Andrew Ahlborn and Gary Taylor will remain in their current roles. The Board of the combined company is expected to have eight Directors, consisting of Ready Capital's existing seven Directors and one independent Director from Anworth's current Board. Following consummation of the merger, Ready Capital's current external manager, Waterfall Asset Management, LLC will continue to serve as the external manager of pro-forma entity. The transaction is subject to the respective approvals by the stockholders of Anworth and Ready Capital and other customary closing conditions including Registration Statement shall have been declared effective by the SEC under the Securities Act and shares of Ready Capital Corporation shall have been approved for listing on the NYSE. The deal is also conditional on the receipt of tax opinions relating to the REIT status of each of Ready Capital and Anworth and relating to the qualification of the merger as a reorganization under Section 368(a) of the code. The transaction has been unanimously approved by each of the Boards of Directors of Ready Capital and Anworth. Special meetings of stockholders of both Anworth and Ready Capital will be held on March 17, 2021 to approve the deal. As of March 17, 2021, stockholders of Anworth Mortgage Asset Corporation approved the transaction.

The transaction is expected to close by the end of the first quarter of 2021. As per filing on December 10, 2020, the transaction is expected to close as soon as the first quarter of 2021. As of February 5, 2021, the merger is expected to be close by the end of the first quarter of 2021. As per March 4, 2021 filing, the transaction is expected to close on March 19, 2021. Anworth common stock is expected to be delisted from trading on the New York Stock Exchange (“NYSE”) after the close of trading on March 19, 2021. The investment portfolio redeployment will drive long-term earnings accretion with the ability to recycle capital into accretive investment opportunities with attractive risk-adjusted returns and more efficient capital utilization as new investments are funded. Wells Fargo Securities acted as exclusive financial advisor and fairness opinion provider and Michael Kessler, David E. Brown, Rosemarie Thurston, Jim Croker, Shawna Tunnell, Blake Estes, Paul Hespel, Michael Thimmig and Kerry Wenzel of Alston & Bird LLP acted as legal advisors to Ready Capital. Credit Suisse Securities (USA) LLC acted as exclusive financial advisor and fairness opinion provider and Mark J. Kelson and M. Adel Aslani-Far of Greenberg Traurig, LLP acted as legal advisors to the Board of Directors of Anworth. Phillip R. Mills of Davis Polk & Wardwell acted as legal advisor to Wells Fargo Securities. Ready Capital has agreed to pay Wells Fargo an aggregate fee of approximately $3.5 million, $1 million of which became payable to Wells Fargo on December 6, 2020, and the remainder of which is contingent and payable upon the consummation of the merger. Anworth has agreed to pay Credit Suisse for its financial advisory services in connection with the proposed merger an aggregate fee currently estimated to be $5 million, of which a portion was payable upon the rendering of Credit Suisse's opinion and $4 million is contingent upon consummation of the proposed merger. Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to Credit Suisse Securities (USA) LLC in the transaction. American Stock Transfer & Trust Company, LLC acted as transfer agent to Ready Capital. Morrow & Co., LLC acted as information agent to Anworth. Anworth estimates it will pay Morrow Sodali a fee of approximately $13,500.

Ready Capital Corporation (NYSE:RC) completed the acquisition of Anworth Mortgage Asset Corporation (NYSE:ANH) on March 19, 2021. As of the closing of trading on March 19, 2021, Anworth ceased to be publicly traded and its common stock and preferred stock was suspended from trading on the NYSE. Each member of the Board of Directors of Anworth ceased to be a Director of Anworth. These Directors are Joseph E. McAdams, Joe E. Davis, Robert C. Davis, Mark S. Maron, Joseph Lloyd McAdams, and Dominique Mielle. At the effective time, each of the officers of Anworth, Joseph E. McAdams and Charles J. Siegel, ceased to be an officer of Anworth.