Ellington Financial-Great Ajax merger plan collapses

REITs fail to seal the deal but remain joint venture partners

Ellington Financial-Great Ajax merger plan collapses

Ellington Financial and Great Ajax have reached a mutual agreement to put a stop to their merger after Ellington secured a new business combination deal with another real estate investment trust.

Ellington, known for its diverse investment in financial assets, including residential and commercial mortgage loans, and Great Ajax, primarily invested in residential loans, announced the merger agreement on July 3.

“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,” the joint statement read.

The REITs said they intend to continue to work together on mortgage loan opportunities and will remain joint venture partners on securitization transactions.

Additionally, Ellington has agreed to pay $16 million to Great Ajax for the purchase of 1.67 million shares of Great Ajax common stock at a per-share price of $6.60. This sum is divided into a $5 million cash payment and an $11 million payment.

Ellington now holds a 6.1% stake in Great Ajax, and an affiliate of the external manager of Ellington owned 273,983 shares of Great Ajax common stock as of June 30.

The announcement comes after Ellington entered a definite merger agreement with Arlington Asset Investment. The deal will form a combined company with an equity capital base of over $1.5 billion.

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