Inside the bidding war that sank UWM’s acquisition of Two Harbors

UWM Holdings Corp. tied its acquisition of Two Harbors Investment Corp. to its stock price, ultimately failing to complete the deal even after adding a cash portion. When CrossCountry Intermediate HoldCo emerged as the seller’s preferred option, UWM suggested potential litigation, according to a public filing by TWO.

UWM revised its original proposal — an exchange ratio of 2.3328 shares of UWMC Class A common stock for each TWO share — twice to save the deal amid a declining stock price. The deal would have marked UWM’s first acquisition.

Analysts had pointed to UWM’s falling stock price as a key factor in the failed acquisition, although the company previously told HousingWire its stock performance has nothing to do with fundamentals. UWM declined to comment on the new information disclosed by TWO. 

Cash backstop

UWM’s initial all-equity proposal implied an $11.94 price based on its Dec. 16 closing price. But when CCM made a $10.70 all-cash proposal on March 17 — approximately twice the book value plus payment of a $25.4 million termination fee to UWM — UWM’s offer equated to paying just $8.54 per share, the filing with the Securities and Exchange Commission states.

CCM stated its proposal “would be a fixed price, all-cash offer with no financing contingencies, meaning that CCM would assume the market risk of fluctuations of TWO’s book value during the period prior to the closing of a transaction,” Two Harbors said in public filing. CCM also delivered a financing commitment letter from a leading national bank for a $2 billion secured loan facility.

UWM’s first revised proposal added a cash backstop. It guaranteed TWO shareholders up to $10.71 per share, with UWM paying cash to cover any shortfall between that amount and the stock consideration based on UWM’s recent average share price. UWM capped the added cash at $2 per share, totaling about $212.8 million.

The TWO board leaned toward accepting the CCM offer. But a third undisclosed bidder, Company A, proposed the acquisition of TWO for $10.75 per share in cash or a stock-for-stock reverse merger where Company A would merge into TWO, giving TWO stockholders a stake of roughly 16.1% in the combined company.

CCM then raised its offer to $10.80. Company A countered with a cash election option allowing up to 25% of Two Harbors’ common shares to be cashed out at $11.09 per share, subject to proration. But Company A lacked draft deal agreements, required significant due diligence, faced a lengthy path to closing and failed to provide enough financial information for TWO to properly value the bid, the seller said.

Meanwhile, UWM submitted a second revised bid, raising its offer to provide a cash-equivalent value of $10.95 per share through a mix of stock and cash. This version removed the cap on total cash consideration.

Breached merger agreement?

Still, the TWO board said the final value remained uncertain because it depended on UWM’s 10-day average stock price before closing rather than the actual closing-day price. Shareholders would need to sell UWM shares in the open market to realize the full cash value. The board also accused UWM of limited engagement regarding potential synergies.

“Houlihan Lokey’s analysis showed the implied value often fell below an alternative CCM proposal, including in a March 24, 2026 simulation where the total value was about $10.52 per share ($8.42 in stock plus $2.10 in cash), highlighting variability and potential downside versus the headline price,” TWO said in public filing. 

UWM accused TWO of breaching merger agreement obligations, including non-solicitation and good-faith negotiation terms, the filing states. The wholesale lender warned it could pursue a hostile bid or legal remedies if TWO accepted competing offers. UWM sent TWO a document preservation notice, signaling potential legal claims and requiring records related to the dispute to be retained.

Two Harbors rejected UWM’s allegation. Through its counsel, the company asserted it fully complied with all merger agreement obligations, including vote solicitation, non-solicitation rules, consideration of superior offers and good-faith negotiations. Two Harbors reminded UWM of its own contractual duties and asked UWM to preserve relevant documents.

TWO entered into an agreement with CCM on March 27, 10 days after the initial unsolicited proposal.

In a statement following the deal’s collapse, a UWM spokesperson said the company “presented an offer that is higher in value in every respect including a materially accelerated timing relative to the offer they want to accept.”

“The full context will be made public in due course, allowing both shareholders and the courts to evaluate the facts accordingly,” the spokesperson said.