UWM Holdings' latest bid for Two Harbors consists of $12 cash per share or 2.3328 shares of its common stock, looking to top the $11.30 per share cash price CrossCountry Mortgage agreed to pay.

The Troy, Michigan-based lender, whose previous all-stock deal to buy Two Harbors failed to obtain a quorum at the special meeting to vote on the transaction, disclosed its latest offer in a letter to shareholders of the real estate investment trust.

KBW's take on the UWM higher bid

"UWMC's revised bid likely keeps pressure on the TWO board and likely increases the probability that CCM matches or improves its offer," Bose George, an analyst with Keefe, Bruyette & Woods, said in note on the letter.

For CrossCountry he pointed to the strategic value of Two Harbors' RoundPoint mortgage servicing platform. This is combined with CrossCountry already raising its bid from the initial price of $10.80 per share.

KBW continues to see this transaction as a positive for UWMC, but stock price accretion is likely to be fairly neutral given the interest expense (expected to be at a 6% cost of funds) related to the deal if 100% of shareholders chose cash.

The amended transaction was disclosed on April 28 after the stock market closed and just before Two Harbors released its first quarter results; the earnings call was the following morning.

The letter details the April 20 UWM offer disclosed by Two Harbors which offered a full cash or stock election for the same $11.30 per share which CrossCountry ended up agreeing to pay. This updated bid was supported by a $1.2 billion bridge facility from Mizuho Bank.

"This is the definition of entrenchment. They did not negotiate on your behalf with us," the UWM letter said. "Instead, they just had CrossCountry raise the bare minimum to match what is essentially the floor value of our prior offer and then made it harder for UWMC to offer you more value by agreeing to a higher termination fee with CrossCountry."

The letter continues UWM's attacks on Two Harbors' management.

The termination fee is now $50 million, nearly double the prior $25.4 million, UWM said.

Explaining the options for cash or stock

Maintaining the option to accept consideration in stock allows those elect to do so share in the upside of UWM ownership, the letter said. Based on UWM's opening price on May 1 at $3.50, this has a value of about $8.16 per share. At the time the UWM-Two Harbors deal was reached, the value was $11.94 per share.

"Since that time, UWMC stock has been impacted by short selling, arbitrage activity, global events and, in our view, the actions of your own Board," the letter said. "The intrinsic value of UWMC, however, has not changed; if anything, it has improved."

It pointed to its 2026 first quarter results, which "was better than our expectations;" these will be released on May 6

This offer has no cap, no proration and no forced allocation, UWM said.

To support the new offer, the Mizuho facility was increased to $1.3 billion.

"We believe that this offer is a Superior Offer and we strongly urge TWO stockholders to reach out to your Board and tell it to negotiate with UWMC to finalize a Merger Agreement with us and bring you this higher value alternative," the letter continued.

NMN reached out to UWM, CrossCountry and Two Harbors for comment; the first two acknowledged the request but did not supply additional details.

In an emailed statement, Two Harbors said it has UWM's "further revised, unsolicited, non-binding proposal." Its board will review this proposal in a timely manner, consistent with its fiduciary duties and in line with the merger agreement.

But the review process, for now, will not halt Two Harbor's plans to go ahead with the CrossCountry deal.

"The merger agreement with CCM remains in full force and effect, and our Board's recommendation in favor of the CCM transaction is unchanged," the statement said. "The Board continues to encourage TWO stockholders to vote in favor of the CCM transaction at the upcoming special meeting."

The shareholder meeting is scheduled for May 19.

"As always, TWO is committed to keeping stockholders appropriately informed as the Board completes its review. The Board will provide an update regarding the UWMC proposal in due course," the statement said.

Stephens now covering UWM

Stephens started coverage on UWM, Rocket, PennyMac Financial Services and Walker & Dunlop on April 23. Its May 1 report from Kyle Joseph does not mention the revised bid, but does make a pair of comments on the transaction.

"UWMC remains more cyclical given some opportunistic MSR sales and the termination of the TWO acquisition," Joseph said in a section on cyclicality and business evolution.

In a later statement on the theme of cyclicality and how it impacts the four companies, Joseph pointed to Pennymac's balance between servicing and originations and Rocket's attempt to replicate this with the Mr. Cooper acquisition.

"UWMC attempted to follow suit with the announced, and subsequently terminated, acquisition of Two Harbors," Joseph said.