UWM Holdings Corp. is signaling that its pursuit of Two Harbors Investment Corp. may not be over at $12.50 per share.
In an open letter to Two Harbors shareholders Thursday, UWM reaffirmed its existing acquisition proposal while also indicating it remains willing to negotiate enhancements to the offer if the mortgage REIT's board agrees to engage. The company continued to urge shareholders to reject Two Harbors' proposed merger with CrossCountry Mortgage ahead of a June 11 shareholder vote.
UWM's current proposal would allow shareholders to receive either $12.50 per share in cash or 2.3328 shares of UWM stock, compared with CrossCountry's $12.00-per-share all-cash offer.
UWM Leaves Door Open To Better Terms
While much of the letter reiterated UWM's longstanding argument that its proposal offers greater value than CrossCountry's bid, the company also suggested additional value could be created through negotiations.
"UWMC is prepared to consider enhancements to our terms if the TWO Board is willing to engage," the company wrote. "Other enhancements can only be realized through open engagement."
UWM specifically said it would consider modifications to its stock-election structure, including a potential change that would allow smaller retail shareholders to automatically receive whichever option — cash or stock — provides greater value.
The comments are notable because they suggest UWM does not view its May 11 proposal as the final possible outcome of the bidding contest and continues to argue that negotiations could unlock additional shareholder value.
The disclosure is also significant because it marks the first time UWM has publicly outlined specific changes it would consider making to the structure of its offer. Throughout the bidding battle, UWM has argued that its proposal is superior to CrossCountry's, but Thursday's letter went a step further by signaling concrete areas where the company may be willing to make adjustments if discussions occur.
Pressure Builds On Two Harbors Board
The letter also escalated UWM's criticism of the Two Harbors board, which has repeatedly rejected the company's advances and continues to support the CrossCountry transaction.
"Your Board is relying on delay tactics that it hopes will wear down stockholders into accepting a less valuable transaction, even though UWMC's superior proposal has been and continues to be on the table," UWM wrote.
The company further argued that shareholders have already indicated dissatisfaction with the CrossCountry transaction and pointed to recommendations from ISS, Glass Lewis, and Egan-Jones that investors vote against the deal.
"CCM's best and final proposal undoubtedly falls short of the superior stockholder value to be delivered by UWMC," the company wrote.
UWM also seized on recent comments from CrossCountry describing its bid as a "best and final offer," arguing that its own willingness to negotiate stands in contrast to a competing proposal that appears fixed.
"In addition to stating that its current, inferior proposal is its 'best and final offer,' CCM stated that it 'will not pursue a deal at all costs; there are other strategic alternatives available,'" UWM wrote. "For TWO stockholders, the other – and best – strategic alternative available is to engage with UWMC to maximize value."
A Battle Over RoundPoint
The latest letter is the newest chapter in a months-long battle for control of Two Harbors and its RoundPoint Mortgage Servicing platform.
CrossCountry agreed to acquire the mortgage REIT for $12.00 per share in March, prompting Two Harbors to terminate its previous agreement with UWM. UWM subsequently returned with a competing bid, eventually increasing its offer to $12.50 per share in May and winning support from ISS, which argued the sales process had not maximized shareholder value. Glass Lewis and Egan-Jones later issued similar recommendations.
Two Harbors' board has consistently backed the CrossCountry transaction, most recently describing UWM's latest proposal as "illusory, predatory, and unactionable" while reaffirming its recommendation that shareholders approve the CCM merger.
For UWM, the pursuit carries strategic importance beyond the acquisition itself. RoundPoint's servicing platform would significantly expand UWM's mortgage servicing footprint at a time when servicing rights remain among the industry's most valuable assets and a key driver of earnings across the sector.
Shareholders are scheduled to vote on the proposed CrossCountry transaction on June 11. UWM is urging investors to vote against the merger and continues to push the board to engage with its competing offer.
With the vote approaching, Thursday's letter appears to be aimed at delivering a clear message to shareholders: rejecting the CrossCountry transaction may not simply preserve UWM's existing offer but could create an opportunity for a more valuable proposal if the Two Harbors board is ultimately forced to negotiate.
