Ready Capital Corp. came out on top after three rounds of bidding to acquire Owens Realty Mortgage Inc.
At the direction of Owens Realty Mortgage's special committee, Barclays in early September reached out to 17 potential candidates to gauge their interest in pursuing a strategic transaction with the company. One party asked to join the process, raising the number of potential counterparties to 18.
Six companies including Ready Capital submitted their bids Sept. 28. On Oct. 3, Ready Capital and two other companies were invited for a second round of bidding.
A party who did not make it to the first round of bidding also submitted a proposal but it was rejected by Owens Realty Mortgage.
Ready Capital and the two other parties submitted their revised proposals on Oct. 22. Ready Capital had the highest offer, at $22.04 per Owens Realty Mortgage common share. In comparison, the two parties proposed $21.81 per share and $21.37 per share. The three parties were asked to clarify a few legal and business points from their proposals and to participate in a third round of bidding.
On Oct. 25, only Ready Capital and one other party submitted proposals for the third round. Ready Capital increased its bid price and addressed several legal and business points; the other party addressed legal and business points but did not increase the bid price. Owens Realty Mortgage deemed Ready Capital's proposal as the more attractive one.
The following day, Barclays asked Ready Capital to include in its proposal the election of two Owens Realty Mortgage directors to Ready Capital's board instead of just one director. Barclays also asked Ready Capital to give out its best and final terms. Ready Capital did not agree on the addition of another Owens Realty Mortgage director to its board but increased the exchange ratio to 1.441, which raised the purchase price to $22.50 per share.
On Nov. 7, Ready Capital and Owens Realty Mortgage executed the merger agreement. The deal includes termination fees of $8.0 million, payable by Owens Realty Mortgage, and $10.0 million, payable by Ready Capital, under certain circumstances. It also includes a $1.0 million expense amount, payable by either party under certain circumstances. In no event will Ready Capital be entitled to receive more than one payment of a termination fee or expense amount.