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Deutsche Bank Downgrades Crexus Investment (CXS) to 'Hold' After Annaly (NLY) Offer

 November 13, 2012 02:43 PM

(By Balachander) Deutsche Bank (DB) downgraded its rating on shares of Crexus Investment Corp. (NYSE: CXS) to "hold" from "buy" after Annaly Capital Management Inc. (NYSE: NLY) offered $12.50 per share in cash for the remaining shares of CXS.

"Given that we expect CXS to accept NLY's offer and with shares trading within 1 percent of the all-cash offer, we are downgrading shares of CXS to a 'hold' from a 'buy'," the bank said.

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The bank raised price target on the stock to $12.50 from $12.00 based on Annaly's all-cash offer.

DB does not expect any other bidders to emerge and expects CXS to accept Annaly's offer, which represents a roughly 5 percent premium to 9/30 book value of $11.93 per share.

"Given overlap between FIDAC employees and CXS's board of directors, a special committee will be created to review the offer, which we assume will be accepted," DB said.

CXS shares, which have been trading in a 52-week range of $9.06 to $12.67, shed 0.32 percent to trade at $12.39 on Tuesday.

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