Annaly Capital Management, Inc. (NYSE:NLY) recently reported that its subsidiary, Fixed Income Discount Advisory Company, has reached an agreement with Chimera Investment Corp. to help internalize the management of Chimera. The deal was priced at $126.4 million, paid in stock to Annaly.
Annaly is one of the largest capital management companies and sets an example of its capabilities by exercising superb cost control in a large organization. Ironically, the company has also been criticized for over-paying its executives for managing the company’s large portfolio. However, despite the highly exaggerated pay-scales, only a small fraction of its net income is utilized for expenses. Furthermore, the company has a habit of reporting its finances timely and accurately. This tends to keep the shareholders up-to-date with the company position. All this tends to make the company a safer bet than many in the stock market.
The deal with Chimera is expected to improve the financial and operational stabilities of the two companies. The CEO of Annaly, Kevin Keyes, expressed pride at contracting the deal with Chimera and stated that it was in line with the portfolio diversification strategy being practiced at Annaly. The CEO of Chimera, Paul Donlin, expressed his delight at the agreement, stating that it will help the company enhance share value, while staying put with its current management team.
As part of the deal, the current FIDAC personnel focusing on Chimera will be made employees of the company, while there would be no executive changes at Chimera. FIDAC will also continue to provide additional assistance to the company, until it can transition to its own systems. The financial operations of the deal are being looked over by Credit Suisse, on behalf of Annaly. Chimera and Annaly have engaged Dechert LLP and DLA Piper as legal advisors, respectively.
Annaly Capital Management, Inc. (NYSE:NLY), while hosting a trade volume of 0.00 during the September 15 session, managed to report an increase of 0.3% in share value, before closing a share price of $10.15.
