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Prospectuses and communications, business combinations



Washington, D.C. 20549





Date of Report (Date of earliest event reported)

April 10, 2016

Annaly Capital Management, Inc.

(Exact Name of Registrant as Specified in its Charter)




State or Other Jurisdiction
Of Incorporation)

File Number)

(I.R.S. Employer
Identification No.)

Registrants telephone number, including area code: (212) 696-0100

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Merger Agreement

On April 10, 2016, Annaly Capital Management, Inc., a Maryland corporation (Annaly), Ridgeback Merger Sub Corporation, a Maryland corporation and a wholly owned subsidiary of Annaly (Purchaser), and Hatteras Financial Corp., a Maryland corporation (Hatteras), entered into an Agreement and Plan of Merger (the Merger Agreement).

Pursuant to the Merger Agreement, and upon the terms and conditions thereof, Purchaser will commence an exchange offer (the Offer) to purchase all of Hatteras issued and outstanding shares of common stock, par value $0.001 per share (the Hatteras Common Shares). In the Offer, holders of Hatteras Common Shares will have the option to elect from among three forms of consideration for each Hatteras Common Share (subject to proration as described below):

· $5.55 in cash and 0.9894 shares of Annaly common stock (the Mixed Consideration Option);

· $15.85 in cash (the Cash Consideration Option); or

· 1.5226 shares of Annaly common stock (the Stock Consideration Option).

Holders of Hatteras Common Shares who do not make a valid election will receive the Mixed Consideration Option for their Hatteras Common Shares. Holders who elect to receive the Cash Consideration Option or Stock Consideration Option will be subject to proration to ensure that approximately 65% of the aggregate consideration paid to holders of Hatteras Common Shares in the Offer will be paid in the form of Annaly common stock and approximately 35% of the aggregate consideration paid to holders of Hatteras Common Shares in the Offer will be paid in cash.

It is a condition to the closing of the Offer that one share more than two-thirds of the outstanding Hatteras Common Shares, when added to any Hatteras Common Shares owned by Annaly and Purchaser, are validly tendered and not validly withdrawn. In addition to the minimum tender condition, completion of the Offer is subject to the satisfaction or waiver of a number of other customary closing conditions as set forth in the Merger Agreement, including the effectiveness of a registration statement on Form S-4 registering the shares of Annaly common stock to be issued in connection with the Offer and the Merger and the receipt of certain regulatory approvals.

Immediately following the closing of the Offer, subject to the terms and conditions set forth in the Merger Agreement, Hatteras will be merged with and into Purchaser (the Merger), with Purchaser surviving the Merger. The Merger Agreement contemplates that, if the Offer is completed, the Merger will be effected pursuant to Section 3-106.1 of the Maryland General Corporation Law, which permits completion of the Merger without a vote of the holders of Hatteras Common Shares upon the acquisition by Purchaser of at least two-thirds of Hatteras Common Shares that are then issued and outstanding. In the Merger, holders of Hatteras Common Shares will be entitled to the same election options as described above for the Offer and subject to the same proration rules.

Each share of Hatteras 7.625% Series A Cumulative Redeemable Preferred Stock, par value $0.001 per share (Hatteras Preferred Share), that is outstanding as of immediately prior to the Merger will be converted into one share of a newly-designated series of Annaly...