Annaly Capital Management Inc. (NYSE: NLY) and Hatteras Financial Corp. (NYSE: HTS) saw huge volumes of shares moving early Monday morning following a merger agreement. These companies announced the signing of a definitive merger agreement under which Annaly will acquire Hatteras in a cash and stock deal.

Hatteras is being valued at $15.85 per share of its common stock, based on the closing price of Annaly common stock on April 8. The value of the consideration represents a premium of roughly 11.2% compared to Friday’s closing price of $14.26, and a multiple of 0.85 times Hatteras’ estimated book value per share as of February 29, 2016.

According to the agreement, for each share of Hatteras common stock, shareholders may elect to receive: $5.55 in cash and 0.9894 shares of Annaly common stock, $15.85 in cash or 1.5226 shares of Annaly common stock.

Kevin Keyes, CEO and president of Annaly, commented:

This strategic transaction represents a unique and sizeable value creation opportunity for our shareholders. With the acquisition of Hatteras, we significantly grow our diversified portfolio and broaden our investment options, further fortifying Annaly’s position as the market leading mortgage REIT.

Michael R. Hough, chairman and CEO of Hatteras, added:

We are excited by the opportunity to join the Annaly platform and believe our diversification efforts are greatly enhanced by the industry-leading business Annaly has built. The complementary nature of this transaction should enhance the risk-adjusted value proposition we’ve always strived for.

Shares of Annaly were trading down 1.7% at $10.23 on Monday, with a consensus analyst price target of $10.65 and a 52-week trading range of $8.25 to $10.59.

Hatteras traded up 9.9% at $15.67, with a consensus analyst price target of $16.19 and a 52-week trading range of $10.54 to $18.82.

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