WMIH Corp (NASDAQ: WMIH) is having an overwhelmingly strong day in the market today, and for good reason. The company announced that it has entered into a definitive merger agreement, leading to excitement among investors and sending the stock screaming for the top. Today, we’ll talk about the news, what we’re seeing from the stock, and what we’ll be watching for with regard to the WMIH merger ahead.
WMIH Gains On Merger Announcement
As mentioned above, WMIH is having an overwhelmingly strong day in the market today after announcing that it has entered into a definitive merger agreement. The agreement was signed with Nationstar Mortgage Holdings Inc. (NSM). Nationstar is a company that combines mortgage servicing with a fully integrated loan originations platform. The company currently has more than 3 million customers and has made significant investments in its team, technology, and process.
Under the terms of the agreement, NSM shareholders may elect to receive $18.00 in cash or 12.7793 shares of WMIH common stock for each share of NSM they own. This is subject to an overall proration that will enusre that 32% of the total outstanding Nationstar shares are exchanged for the stock. Upon the completion of the transaction, Nationstar shareholders will own approximately 36% of the combined company with WMIH shareholders owning approximately 64%. In a statement, Bill Gallagher, CEO at WMIH, had the following to offer:
Nationstar aligns perfectly with our acquisition strategy and has a strong track record of providing mortgage servicing and loan and real estate offerings in various market conditions… Nationstar’s talented and experienced management team, best-in-class servicing platform, and continued investments in customer education and self-service position it for growth across channels and services. We look forward to working with Nationstar’s talented team to build on the Company’s strong foundation to drive growth, expand the platform and create shareholder value. The combined company is expected to benefit from WMIH’s platform and financial attributes, which are expected to enhance free cash flow available to support business growth and be accretive to shareholders’ equity.
The above statement was followed up by Jay Bray, CEO and Chairman at NSM. Here’s what he had to offer:
We expect this merger to create value for our shareholders in both the near and long-term, including immediate accretion on a cash EPS basis and cash premium for those of our stockholders who elect to receive the cash merger consideration. I am passionately committed to continuing and accelerating our growth and investment as a leader in our industry, leveraging our best-in-class integrated servicing and origination platform. The Nationstar Board and management team have taken considerable steps to make homeownership simpler and more rewarding for our three million customers and we look forward to identifying additional opportunities to enhance value for the combined company’s shareholders.
How The Stock Is Reacting To The News
As investors, one of the first things that we learn is that the news moves the market. In this particular case the news proved to be overwhelmingly positive with a merger that keeps incredible value in the hands of WMIH shareholders. So, it’s no surprise to see strong gains in the value of the stock today. Currently (11:33) WMIH is trading at $1.25 per share after a gain of $0.45 per share or 57.04% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on WMIH. In particular, we’re interested in following the story surrounding the merger. While it has been agreed upon and approved by both companies, it is still subject to regulatory and customary closing conditions. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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