TWO's board calls UWMC's $12.50 proposal illusory and predatory, standing firm on its all-cash CrossCountry deal
Two Harbors Investment Corp. has once again shut the door on UWM Holdings Corporation's latest unsolicited acquisition proposal, standing firm on its pending merger with CrossCountry Mortgage.
The TWO board concluded that UWMC's revised offer does not meet the threshold of a "Company Superior Proposal" under its amended merger agreement with CrossCountry. With a shareholder vote scheduled for May 19, 2026, the board is urging stockholders to back the all-cash CrossCountry deal.
The decision, announced Tuesday, marks the latest flashpoint in what has become one of the most publicly contested deals in the US mortgage industry in recent memory — a months-long bidding war over a company with a $176 billion mortgage servicing rights portfolio that has drawn in two of the country's most prominent mortgage lenders.
After a thorough review with independent financial and legal advisors, the TWO board unanimously determined that UWMC's revised proposal falls short of the "Company Superior Proposal" threshold required under its amended merger agreement with CrossCountry.
UWMC's offer gives stockholders the choice of $12.50 per share in cash or 2.3328 shares of UWMC stock, a structure the board argues is designed to benefit UWMC, not TWO investors.
Read more: UWM’s Ishbia: Despite current headwinds, rates will drop this year, and brokers will dominate
The case against UWMC
At the heart of the board's rejection is what it characterizes as a structurally flawed and potentially predatory proposal.
The board argues the $12.50 headline figure is misleading because the default consideration for stockholders who do not make a timely cash election is UWMC stock — currently valued at approximately $7.58 per TWO share based on UWMC's closing price on May 12, 2026.
TWO estimates that as many as 30% of its stockholders could default into receiving stock rather than cash, a scenario it says UWMC has anticipated and is deliberately designed to reduce the effective transaction value.
The board also raised pointed questions about UWMC's financial condition and its ability to actually close. It noted that Fitch has downgraded UWMC's credit outlook twice in the last six months, that UWMC's cash and equivalents fell from $503 million at year-end 2025 to $425 million as of March 31, 2026, and that the company's leverage has reached an all-time high of 3.2x.
Two Harbors Investment Corp. has doubled down on its support for a sale to CrossCountry Mortgage, rejecting a sweetened takeover proposal from UWM Holdings and urging shareholders to back the all-cash CrossCountry Mortgage (CCM) deal.https://t.co/gmgLF9hslc
— Mortgage Professional America Magazine (@MPAMagazineUS) May 4, 2026
According to the board, Bloomberg's one-year probability of default calculation for UWMC has doubled in just three weeks.
Adding to those concerns, TWO pointed out that UWMC's revised proposal was not accompanied by an increase in the commitment letter from Mizuho Bank, meaning UWMC's existing financing commitment does not cover the full purchase price in an all-cash scenario.
The board raised questions about whether Mizuho had declined to increase its commitment.
The board also challenged UWMC's repeated claim that it could close the transaction within 60 days, noting that regulatory change-of-control approval requirements for TWO's mortgage servicing licenses, including state regulatory and agency approvals, could not realistically be satisfied on that timeline.
It pointed out that no proxy materials or stockholder meeting schedule are in place for an UWMC transaction, meaning any such process would need to restart from zero.
Analyst Christopher Whelan of The Institutional Risk Analyst was cited by the board, who has stated that UWMC could face a write-down exceeding $1 billion, representing more than two-thirds of its equity, if forced to sell its MSR portfolio at market levels.
The board said this raised material questions about UWMC's financial stability and the value of its stock as deal consideration.
CrossCountry: certainty over headlines
By contrast, the board describes the CrossCountry transaction as the only deal that stockholders can rely on to close.
Under the amended CCM agreement, every TWO common stockholder will receive $12.00 per share in cash — a figure the board says exceeds the high end of its financial advisor's fairness opinion valuation ranges. It also represents the highest multiple relative to tangible book value ever paid for a REIT of TWO's type.
The board noted that TWO has already secured 35 of 53 required state regulatory and agency approvals, with the special meeting to vote on the transaction set for next week.
Read more: CrossCountry reaches agreement to buy Two Harbors, nixing UWM deal
CrossCountry's financing package — comprising a $2.0 billion secured facility plus a $1.4 billion unsecured commitment from Citi — is fully committed with no financing contingency attached to the deal.
The board also pushed back against Institutional Shareholder Services (ISS) which stopped short of recommending stockholders vote in favor of the CCM deal in its May 11 report, suggesting additional engagement could yield further changes to the CCM agreement's terms.
TWO argued ISS failed to give adequate weight to the certainty differential between the two transactions. ISS itself acknowledged, in the board's telling, that the CCM offer appeared compelling when evaluated on its own merits.
TWO's board also addressed UWMC's suggestion that the board or management may have personal financial motives for favoring the CrossCountry deal.
It stated that no member of the TWO board is expected to continue with the combined company following closing, and that no offers of employment or discussions about employment have taken place with any named executive officer, regardless of which buyer ultimately prevails.
UWMC earlier argued that if the board continues to reject its offer, the only path for stockholders to force engagement is to vote against the CrossCountry merger at the May 19 special meeting, which would give the board no choice but to negotiate.
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