Ishbia Loses Bid for Two Harbors as CrossCountry Seals Deal

Mat Ishbia’s bid to bulk up UWM Holdings’ mortgage servicing empire came up short.

Shareholders of Two Harbors Investment Corp. voted Thursday to approve the company’s merger with CrossCountry Mortgage, Bloomberg reported, ending a months-long takeover fight that pitted the nation’s largest mortgage lender against one of its biggest rivals.

The vote hands CrossCountry a key portfolio of mortgage servicing rights and shuts the door on what became one of the mortgage industry’s most contentious deal battles.

The saga began in December, when Two Harbors agreed to an all-stock merger with UWM. But as UWM shares tumbled, the economics shifted. The company’s stock has fallen more than 54 percent since the original deal was announced, eroding the value of its fixed exchange offer and prompting Two Harbors to reopen negotiations.

CrossCountry ultimately prevailed with a straightforward all-cash proposal valued at $12 per share. UWM countered with a $12.50 cash option, but only for shareholders who elected cash instead of stock. Two Harbors’ board argued that many investors might not make that election, making CrossCountry’s lower headline price the more reliable outcome.

The back-and-forth fueled increasingly bitter rhetoric. UWM repeatedly accused Two Harbors’ leadership of steering the process toward CrossCountry for its own benefit rather than maximizing shareholder value. Last month, a group of Two Harbors shareholders filed a proposed class-action lawsuit alleging the board breached its fiduciary duties by abandoning UWM’s superior offer.

Following Thursday’s vote, UWM signaled it was moving on but maintained it had put forward the better deal.

“This chapter of the monthslong saga with Two Harbors is now closed,” a company spokesperson said, adding that UWM believed its proposals were superior despite what it characterized as an unfair sale process.

The decision marks a setback for UWM and Ishbia, who could have used the acquisition as a response to the company’s battered stock price and a way to deepen its servicing business as elevated interest rates continue to suppress mortgage originations.

Servicing rights have become one of the industry’s most sought-after assets because they generate steady fee income even when refinancing and home purchases slow.

— Holden Walter-Warner