Ready Capital to Acquire United Development Funding IV
Deal News | Dec 02, 2024 | Globenewswire
Ready Capital Corporation and United Development Funding IV have announced a definitive merger agreement whereby Ready Capital will acquire UDF IV, expanding its portfolio and enhancing its real estate finance operations. The transaction is designed to be accretive to Ready Capital's earnings and book value by 2025 and is expected to offer notable benefits to shareholders of both companies. UDF IV shareholders will receive a combination of cash distributions, Ready Capital shares, and contingent value rights, potentially bringing the total value to $5.89 per UDF share. This strategic acquisition aims to diversify Ready Capital's offerings and strengthen its position in the real estate finance sector, particularly leveraging UDF IV's specialization in land development lending. The merger is anticipated to close in the first half of 2025, pending shareholder approval and other customary conditions.
Sectors
- Real Estate Finance
- Mergers and Acquisitions (M&A)
Geography
- United States – Ready Capital's headquarters are located in New York, and UDF IV operates in Texas; the transaction primarily impacts the U.S. real estate market.
Industry
- Real Estate Finance – The sector includes companies that provide financial services for commercial and residential real estate projects, such as loans and other financial products.
- Mergers and Acquisitions (M&A) – This pertains to the financial transactions in which companies acquire or merge with other companies; this article focuses on the acquisition of UDF IV by Ready Capital.
Financials
- Up to $5.89 per share – Total potential value per UDF IV share including pre-closing distributions, Ready Capital shares, and contingent value rights.
- $75 million – Pre-closing cash distribution from UDF IV's balance sheet to its shareholders.
- $94 million – Value of Ready Capital shares issued for UDF IV shares at closing.
- $12 million – Estimated future value of contingent value rights given to UDF IV shareholders.
- Pro forma equity capital base in excess of $2.2 billion – Expected equity capital base of Ready Capital post-transaction.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Ready Capital Corporation | Acquiring Company | Company | A multi-strategy real estate finance company that originates, acquires, finances, and services commercial real estate loans. |
| United Development Funding IV | Target Company | Company | A real estate investment trust providing capital solutions to residential real estate developers and homebuilders. |
| Piper Sandler & Co. | Financial Advisor to Ready Capital | Company | Serves as the exclusive financial advisor to Ready Capital in the merger deal. |
| Alston & Bird LLP | Legal Advisor to Ready Capital | Company | Provides legal advisory services to Ready Capital for the merger. |
| Moelis & Company LLC | Financial Advisor to UDF IV | Company | The exclusive financial advisor to UDF IV for this transaction. |
| Gibson, Dunn & Crutcher LLP | Legal Advisor to UDF IV | Company | Legal advisor for UDF IV in the merger transaction. |
| Holland & Knight LLP | Legal Advisor to UDF IV Board Special Committee | Company | Legal counsel to the special committee of UDF IV's Board of Trustees. |