Great Ajax stock rallies after Ellington Financial agrees to buy it at a premium in REIT merger

Great Ajax Corp.
AJX,
+13.38%
stock is rallying 9% in premarket trades Monday after it agreed to be acquired by Ellington Financial Inc.
EFC,
-1.88%
for about $173 million in stock. Ellington Financial said each share of Great Ajax common stock will be converted into 0.5308 shares of Ellington Financial common stock, or approximately 12.5 million shares of Ellington Financial common stock valued at about $172.5 million. The deal implies an offer price of $7.33 per share for Great Ajax common stock, a premium of 19% above its closing price of $6.13 a share on Friday. Ellington Financial stockholders would own about 84% of the combined company. The deal combines two real estate investment trusts. Great Ajax has focused mostly on residential mortgage loans, while Ellington Financial invests in a “diverse array of financial assets including residential and commercial mortgage loans.” Great Ajax’s portfolio includes more than $1 billion of first-lien residential re-performing loans and non-performing loans. Ellington Financial stock is down 0.9% in premarket trades.