New Residential Investment Corp., a U.S. real estate investment trust, agreed to buy Home Loan Servicing Solutions for about $1.3 billion.
New Residential will acquire the outstanding shares of Home Loan, which is based in the Cayman Islands, for $18.25 each, according to a statement on Sunday. That's 9% more than the closing price on Friday.
The deal addresses "uncertainty" about Home Loan's future financing obligations, HLSS Chief Executive Officer John Van Vlack said in the statement.
HLSS was created by Ocwen Financial Corp. to help finance investments in servicing contracts and was taken public in 2012. Last month, investment firm BlueMountain Capital Management said "misconduct" by Ocwen triggered a default in securities issued by an HLSS trust. HLSS said it would "vigorously defend against the claims."
New Residential was formed by Newcastle Investment Corp. and spun off as a separate publicly traded entity in May 2013, according to its website. The New York-based company is externally managed and advised by an affiliate of Fortress Investment Group.
"The acquisition will significantly add to the value of our book of mortgage servicing assets and expand our relationships with mortgage servicers," Michael Nierenberg, CEO of New Residential, said in the statement.
The transaction has been approved by both companies and is expected to be completed in the second quarter, according to the statement.
New Residential was advised by Bank of America Merrill Lynch and Credit Suisse Group AG. Citigroup Inc. advised HLSS.
