REITs Ellington Financial, AAIC Merge in $1B+ Cash, Equity Deal

Ellington Financial, a real estate investment trust (REIT), will acquire Arlington Asset Investment Corp. (AAIC), another REIT, in a cash-and-stock deal estimated at more than $1 billion.

Based in the metro-DC area, AAIC shareholders will receive 0.3619 shares per each share of Ellington Financial, or approximately 11.7 million shares, and $0.09 per share in cash, or $3 million, which implies a total offer price of $4.77 per share, a 73% premium over the company’s previous week’s value.

Ellington Financial shareholders will own about 85% of the combined company, while AAIC stockholders will own the rest.

“We are extremely excited about the opportunity to add a significant portfolio of assets – particularly low-coupon mortgage servicing rights – that align very well with our expertise and existing management platform,” said Ellington Financial CEO Laurence Penn.

Penn will continue to lead the combined company, and Ellington Financial executives Michael Vranos, Mark Tecotzky, and JR Herlihy will remain in their current roles.

Both Ellington Financial and AAIC invest in a variety of financial assets, including residential and commercial mortgages.