It was a huge morning for Great Ajax (NYSE:AJX), as its shares are surging at the time of writing. Driving the hefty upswing was news that Ellington Financial (NYSE:EFC) took an interest in Great Ajax, an investment stock. Ellington’s own stock, meanwhile, slipped somewhat. Ellington Financial agreed to acquire Great Ajax in an all-stock deal valued at roughly $173 million. With the deal, all Great Ajax shares will be turned into Ellington Financial shares at the rate of one share of Great Ajax to 0.5308 shares of Ellington Financial.
All told, that will mean roughly 12.5 million shares of Ellington Financial will go into the purchase of Great Ajax, and Ellington Financial shareholders would own roughly 84% of the newly-combined operation. Ellington took a particular interest in Great Ajax, notes a MarketWatch report because they’re in a similar vein. The deal will ultimately bring together two real estate trusts, with Great Ajax focusing on residential mortgages, while Ellington itself is more spread out into commercial and residential loans.
Turning to Wall Street, analysts have a Moderate Buy consensus rating on EFC stock based on five Buys, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic above. Nevertheless, the average price target of $14.11 per share implies only 3.22% upside potential.