FBR, Affiliate to Merge

Friedman, Billings, Ramsey Group Inc., Arlington, Va., and FBR Asset Investment Corp. have agreed to merge in a tax-free stock-for-stock exchange.Under the terms of the transaction, each share of FBR Asset common stock outstanding at closing will be converted into 3.65 shares of Class A common stock, and each share of FBR Group will be converted into one corresponding Class A or Class B share of a new entity that will elect the status of a real estate investment trust for tax purposes. Based on the closing price of FBR Group shares on Nov. 14, the combined company will have a market capitalization of approximately $1.2 billion, the companies said. Based on the $9.50 closing price of FBR Group shares on Nov. 14, the value to be received in exchange for each share of FBR Asset would be $34.68, representing a 22% premium to the closing price of FBR Asset shares on that date. "From FBR Group's perspective, this transaction will add more than $700 million of new capital, and create new business flexibility and earnings stability, while providing substantial dividends to our shareholders in a tax-efficient manner," said Emanuel Friedman, chairman and co-chief executive officer of FBR Group. "The resulting company?s book equity will make it one of the largest public investment banks in the United States."