Why Great Ajax Shares Are Gaining Today

Ellington Financial Inc. EFC entered a definitive merger agreement to acquire Great Ajax Corp. AJX for an implied offer price of $7.33 per share.

The deal represents a 19% premium to the Great Ajax stock closing price on the NYSE on June 30, 2023.

Following the acquisition, each share of Great Ajax common stock will be converted into 0.5308 shares of Ellington Financial common stock, or approximately 12.5 million shares of Ellington Financial common stock in the aggregate.

"We are extremely excited about the opportunity to add a significant portfolio of strategic assets, including over $1 billion of highly creditworthy first-lien residential RPL and NPL investments at attractive prices, which complement our existing investment portfolio nicely and align with our expertise and existing management platform," stated Laurence Penn, Ellington Financial's Chief Executive Officer. 

Upon closing the transaction, Ellington Financial stockholders will own approximately 84% of the combined company's stock, while Great Ajax stockholders will own the remaining 16%.

Ellington Financial expects to rotate out of selected lower-yielding Great Ajax assets and redeploy capital in higher-yielding strategies. 

"We believe that the benefits of this acquisition also include greater operating efficiencies, a larger market capitalization, and a closer relationship with Gregory Funding, Great Ajax's highly respected affiliated mortgage servicer," Penn added.

The transaction will be accretive to earnings within one year of closing.

The combined company will operate as "Ellington Financial Inc."

Price Action: AJX shares are trading higher by 10.14% to $6.75 in the premarket session on the last check Monday.