TWO HARBORS INVESTMENT CORP. Material Event - What Happened

Two Harbors Investment Corp. (ticker: TWO) is a real estate investment trust that manages residential mortgage-backed securities and mortgage servicing rights. The company is shifting its future by canceling a previously planned merger in favor of a new acquisition by a private firm.

1. What happened?

Two Harbors has officially canceled its merger agreement with UWM Holdings Corporation, which was originally signed on January 15, 2026. Instead, the Board of Directors has signed a deal to be acquired by CrossCountry Intermediate Holdco, LLC (CCM) for approximately $1.35 billion. Once the deal closes, Two Harbors will stop trading on the stock market and become a private subsidiary of CCM.

2. Why did it happen?

The Board of Directors determined that the CCM offer was superior to the UWM deal, providing a 14% higher valuation. While Two Harbors was required to pay a $25.4 million termination fee to UWM to exit the previous agreement, CCM has agreed to reimburse Two Harbors for this entire amount, ensuring the company does not lose capital on the transition.

3. What this means for your investment

This is a "take-private" event. Investors will no longer hold shares in a public mortgage REIT.

• Common Stockholders: You are being cashed out. Your shares will be exchanged for a fixed payment of $10.80 per share. This price represents a 12% premium over the average stock price from the 30 days leading up to the announcement.
• Preferred Stockholders: Your shares remain active for now. However, the company is required to redeem your shares at their original value of $25.00 per share, plus any accrued and unpaid dividends, by the time the deal closes.

4. What happens next?

The deal is subject to standard closing conditions:

• Shareholder Vote: You will receive a Proxy Statement in the mail or via email. A majority of shares must vote "yes" for the deal to proceed.
• Regulatory Approval: The government must review the transaction to ensure it complies with antitrust laws.
• Timeline: The companies expect to finalize the deal between March 2027 and June 2027.

5. Key considerations for investors

• The "Spread": The difference between the current market price and the $10.80 offer is known as the "merger arbitrage" spread. A wider gap often reflects market caution regarding the long timeline or potential regulatory hurdles.
• Portfolio Risk: Until the deal officially closes, Two Harbors continues to manage its mortgage assets. It is wise to monitor their quarterly earnings for any significant changes in the value of their portfolio.
• Stay Updated: Disregard any previous materials regarding the UWM merger, as that meeting is canceled. Keep a close eye on the SEC website or the company’s investor relations page for the upcoming Proxy Statement, which will confirm the official voting date.

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Bottom Line: If you are a common stockholder, you are looking at a fixed cash exit of $10.80 per share. Your primary decision is whether to hold your position until the deal closes in 2027 or to sell now and redeploy your capital elsewhere. If you choose to hold, ensure you are comfortable with the risks associated with the mortgage market and the potential for a long wait before the cash payout.