Filed by Friedman, Billings, Ramsey Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the Securities Act of 1934
Subject Company: FBR Asset Investment Corporation
Commission File No: 01-15049
[LOGO]
Investor Contact: Kurt Harrington 703-312-9647 or kharrington@fbr.com
Media Contacts: Bob Leahy 703-312-9745 or bleahy@fbr.com or Bill Dixon
703-469-1092 or bdixon@fbr.com
FRIEDMAN, BILLINGS, RAMSEY GROUP AND FBR ASSET INVESTMENT CORP.
AGREE TO MERGE
ALL-STOCK TRANSACTION EXPECTED TO CLOSE Q1, 2003
ARLINGTON, VA., NOVEMBER 15, 2002 - Friedman, Billings, Ramsey Group, Inc.
(NYSE: FBR) and FBR Asset Investment Corporation (NYSE: FB) today announced that
they have signed a definitive agreement to merge the two firms in a tax-free
stock for stock exchange. Under 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 which will elect REIT
status for tax purposes. Based on the closing price of FBR Group shares on
November 14, 2002, the combined company will have a total market capitalization
of approximately $1.2 billion.
Based on the $9.50 closing price of FBR Group shares on the New York Stock
Exchange on November 14, 2002, 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 the NYSE on November 14, 2002.
The transaction, which is anticipated to close in the first quarter of 2003, is
expected to be accretive to the earnings of both FBR Group and FBR Asset in the
first full year after the merger. The resulting company's book value as of
September 30, 2002, PRO FORMA for the merger, will be more than $1.0 billion, or
$7.68 per share.
The transaction is subject to customary closing conditions, including regulatory
approvals and the approval of both FBR Group and FBR Asset shareholders. If FBR
Group's average stock price for the ten trading days prior to the shareholder
meeting is less than $8.75, FBR Asset may terminate the merger; and FBR Group
may terminate if that price is greater than $10.55.
"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-CEO of Friedman, Billings,
Ramsey Group, Inc. "The resulting company's book equity will make it one of the
largest public investment banks in the United States."
"For FBR Asset, this transaction provides the ability to grow earnings, and
increase the stability and predictability of earnings in different environments,
while maintaining our dividend at $1.37, the pre merger equivalent of $5.00,"
said Eric Billings, Vice Chairman and Co-CEO of Friedman, Billings, Ramsey
Group, Inc. and Chairman, FBR Asset Investment Corporation. "We will accomplish
this while at the same time significantly reducing our overall leverage and
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internalizing our management, thereby increasing substantially the intrinsic
value of our company."
Under the terms of the transaction, the board of directors of both FBR Group and
FBR Asset will be merged, expanding the number of directors by three. Seven of
the nine members of the reconstituted board will be outside directors. Joining
the reconstituted board of FBR Group are Peter A. Gallagher, President and CEO
of America's Promise; Stephen D. Harlan, Chairman of Harlan Enterprises; and
Russell C. Lindner, Chairman of the Forge Company.
The transaction was approved by the Special Committee of the FBR Asset Board of
Directors, consisting of all of the directors of FBR Asset who are not
affiliated with FBR Group. The FBR Asset Special Committee was advised by Lehman
Brothers Inc. A special committee of the Board of Directors of FBR Group,
consisting of all of the independent directors of FBR Group, which was advised
by Goldman Sachs & Co., also approved the transaction.
An investor conference call will be held at 8:30 a.m. U.S. EST, Friday, November
15. Interested media can participate by calling 888-566-5920 (domestic) or
630-395-0193. The pass code is "FBR Call" and the conference leader is Kurt
Harrington. A live webcast of the call will be available via
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=FBR&script=1000.
Replays of the call and webcast will be available afterward.
FBR Asset is a real estate investment trust (REIT) that was formed in December
1997. FBR Asset invests in mortgage-backed securities and makes opportunistic
investments in debt and equity securities of companies engaged in real
estate-related and other businesses. FBR Asset is externally managed by
Friedman, Billings, Ramsey Investment Management, Inc., a subsidiary of
Friedman, Billings, Ramsey Group, Inc. Friedman, Billings, Ramsey Group, Inc. is
currently a minority shareholder of FBR Asset.
Friedman, Billings, Ramsey Group, Inc., headquartered in Arlington, Va., is a
financial holding company for businesses that provide investment banking,
institutional brokerage, specialized asset management, and private client
services. FBR focuses capital and financial expertise on six industry sectors:
financial services, real estate, technology, energy, healthcare, and diversified
industries. FBR also has offices in Atlanta, Bethesda, Boston, Charlotte,
Chicago, Cleveland, Dallas, Denver, Irvine, London, New York, Portland, San
Francisco, Seattle, and Vienna. Bank products and services are offered by FBR
National Bank & Trust, member FDIC and an Equal Housing Lender. For more
information, see http://www.fbr.com.
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STATEMENTS MADE DURING THE CONFERENCE CALL CONCERNING FUTURE PERFORMANCE,
DEVELOPMENTS, NEGOTIATIONS OR EVENTS, EXPECTATIONS OR PLANS AND OBJECTIVES FOR
PRESENT AND FUTURE PERIODS, OR USE OF THE WORDS "BELIEVES," "EXPECTS,"
"ANTICIPATES," OR SIMILAR EXPRESSIONS, CONSTITUTE FORWARD-LOOKING STATEMENTS
THAT ARE SUBJECT TO A NUMBER OF FACTORS, RISKS AND UNCERTAINTIES THAT MIGHT
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM STATED EXPECTATIONS OR CURRENT
CIRCUMSTANCES. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THE EFFECT OF
DEMAND FOR PUBLIC OFFERINGS, ACTIVITY IN THE SECONDARY SECURITIES MARKETS, THE
HIGH DEGREE OF RISK ASSOCIATED WITH TECHNOLOGY AND OTHER VENTURE CAPITAL
INVESTMENTS, CHANGES IN INTEREST RATES, COMPETITION FOR BUSINESS AND PERSONNEL,
AVAILABLE TECHNOLOGIES, DEMAND FOR ASSET MANAGEMENT SERVICES AND GENERAL
ECONOMIC, POLITICAL AND MARKET CONDITIONS. THESE AND OTHER RISKS ARE DESCRIBED
IN THE ANNUAL REPORTS ON FORM 10-K OF BOTH COMPANIES, WHICH ARE AVAILABLE FROM
THE COMPANIES AND FROM THE SEC.
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In connection with the proposed transactions, FBR Group and FBR Asset Investment
Corporation will file a joint proxy statement/prospectus with the Securities and
Exchange Commission. Investors and security holders are urged to carefully read
the joint proxy statement/prospectus regarding the proposed transactions when it
becomes available, because it will contain important information. Investors and
security holders may obtain a free copy of the joint proxy statement/prospectus
(when it is available) and other documents containing information about
Friedman, Billings, Ramsey Group, Inc. and FBR Asset, without charge, at the
SEC's web site at www.sec.gov. Free copies of both companies' filings may be
obtained by directing a request to 1001 Nineteenth Street North, Arlington,
Virginia 22209, Attention: Investor Relations.
Participants in Solicitation
FBR Group, FBR Asset and their respective directors, executive officers and
other members of their management and employees may be soliciting proxies from
their respective stockholders in connection with the proposed merger.
Information concerning FBR Group's participants in the solicitation is set forth
in FBR Group's proxy statement for its annual meeting of stockholders, filed
with the SEC on May 30, 2002. Information concerning FBR Asset's participants in
the solicitation is set forth in FBR Asset's proxy statement for its annual
meeting of stockholders, filed with the SEC on April 23, 2002.