8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)

July 11, 2016

Annaly Capital Management, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland	1-13447	22-3479661
State or Other Jurisdiction Of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1211 Avenue of the Americas New York, New York	10036
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 696-0100

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01. Completion of Acquisition or Disposition of Assets.

On July 12, 2016, Annaly Capital Management, Inc. (“Annaly”) completed the previously announced acquisition of Hatteras Financial Corp. (“Hatteras”) pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of April 10, 2016, by and among Annaly, Hatteras and Ridgeback Merger Sub Corporation, a Maryland corporation and wholly-owned subsidiary of Annaly (“Purchaser”).

As previously disclosed, pursuant to the Merger Agreement, on May 5, 2016, Purchaser and Annaly commenced an exchange offer (the “Offer”) to purchase all of Hatteras’ issued and outstanding shares of common stock, par value $0.001 per share (the “Hatteras Common Shares”).  In the Offer, subject to the terms and conditions and limitations set forth in the Merger Agreement, each Hatteras Common Share accepted by Purchaser was exchanged for the right to receive, at the election of the holder thereof (subject, in the case of elections of the All-Cash Consideration or All-Stock Consideration, to the proration procedures described in the Merger Agreement):

·$5.55 in cash and 0.9894 shares of Annaly common stock (the “Mixed Consideration”);

·$15.85 in cash (the “All-Cash Consideration”); or

·1.5226 shares of Annaly common stock (the “All-Stock Consideration”).

Holders of Hatteras Common Shares who tendered into the Offer but did not make a valid election received the Mixed Consideration for their Hatteras Common Shares.

The Offer expired at 5:00 p.m., Eastern Time, on July 11, 2016 (the “Expiration Time”).  Computershare, the depositary and exchange agent for the Offer, advised Annaly that, as of the Expiration Time, a total of 70,066,823 Hatteras Common Shares had been validly tendered and not validly withdrawn pursuant to the Offer, which tendered Hatteras Common Shares represented approximately 74.12% of the issued and outstanding Hatteras Common Shares.  Purchaser accepted for payment and exchange all such Hatteras Common Shares validly tendered and not validly withdrawn.

On July 12, 2016, pursuant to the terms of the Merger Agreement and in accordance with Section 3-106.1 of the Maryland General Corporation Law, Hatteras merged with and into Purchaser (the “Merger”), with Purchaser continuing as the surviving corporation.  At the effective time of the Merger (the “Effective Time”), each Hatteras Common Share that was outstanding immediately prior to the Effective Time and not tendered pursuant to the Offer was converted into the right to receive (i) the Mixed Consideration, (ii) the All-Cash Consideration or (iii) the All-Stock Consideration, subject in each case to the election procedures and, in the case of elections of the All-Cash Consideration or All Stock Consideration, to the proration procedures described in the Merger Agreement.

At the Effective Time, each share of Hatteras 7.625% Series A Cumulative Redeemable Preferred Stock, par value $0.001 per share (“Hatteras Preferred Share”), that was outstanding as of immediately prior to the Effective Time was converted into one share of Annaly 7.625 Series E Cumulative Redeemable Preferred Stock, par value $0.01 per share (“Series E Preferred Shares”), which has the rights, preferences, privileges and voting powers substantially the same as a Hatteras Preferred Share immediately prior to the Effective Time.

The foregoing descriptions of the Offer, the Merger and the Merger Agreement are qualified in their entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and incorporated herein by reference.

Item 3.03 Material Modification to Rights of Security Holders.

On July 12, 2016, Annaly filed with the State Department of Assessments and Taxation of the State of Maryland articles supplementary setting forth the terms of the Series E Preferred Shares (“Articles Supplementary”).  The terms of the Series E Preferred Shares have been previously described under the section

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entitled “Description of Annaly Capital Stock—Description of Annaly Series E Preferred Stock” of the Registration Statement on Form S-4 (File No. 333-211140) filed by Annaly with the Securities and Exchange Commission (“SEC”) on May 5, 2016, as amended, which section is hereby incorporated by reference.  Upon issuance of the Series E Preferred Shares, as more fully described in the Articles Supplementary, the Series E Preferred Shares will rank, with respect to dividend rights and rights upon voluntary or involuntary liquidation, dissolution or winding up of Annaly’s affairs, senior to all classes or series of Annaly common stock, and to any other class or series of Annaly stock expressly designated as ranking junior to the Series E Preferred Shares.

The foregoing description of the Articles Supplementary is qualified in its entirety by the full text of the Articles Supplementary, a copy of which is filed as Exhibit 3.1 hereto and incorporated herein by reference.

Item 5.03 Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information set forth in Item 3.03 of this report is incorporated herein by reference.

Item 8.01 Other Events.

On July 12, 2016, Annaly issued a press release announcing the expiration and results of the Offer, and the anticipated consummation of the Merger.  A copy of the press release is filed as Exhibit 99.1 hereto and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.  The financial statements of Hatteras required by Item 9.01(a) to this Current Report on Form 8-K are incorporated herein by reference to Hatteras’ Annual Report on Form 10-K for the year ended December 31, 2015 and to Hatteras’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.

(b) Pro Forma Financial Information.  The pro forma financial information required by Item 9.01(b) to this Current Report on Form 8-K is incorporated hereby by reference to the unaudited pro forma condensed combined balance sheet as of March 31, 2016 and the unaudited pro forma condensed combined statement of earnings for the three months ended March 31, 2016 and the year ended December 31, 2015, in each case included in Annaly’s Registration Statement on Form S-4/A filed by Annaly with the SEC on July 1, 2016.

(d) Exhibits

Exhibit Number	Description
2.1	Agreement and Plan of Merger, by and among Annaly Capital Management, Inc., Ridgeback Merger Sub Corporation and Hatteras Financial Corp., dated as of April 10, 2016 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Annaly on April 11, 2016).
3.1	Articles Supplementary designating Annaly’s 7.625% Series E Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.12 to the Form 8-A filed by Annaly on July 12, 2016).
23.1	Consent of Ernst & Young LLP.
99.1	Press release, dated July 12, 2016.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ANNALY CAPITAL MANAGEMENT, INC.
	By:	/s/ Glenn A. Votek
		Name: Glenn A. Votek
		Title: Chief Financial Officer
Dated: July 12, 2016

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Exhibit Number	Description
2.1	Agreement and Plan of Merger, by and among Annaly Capital Management, Inc., Ridgeback Merger Sub Corporation and Hatteras Financial Corp., dated as of April 10, 2016 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Annaly on April 11, 2016).
3.1	Articles Supplementary designating Annaly’s 7.625% Series E Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share (incorporated by reference to Exhibit 3.12 to the Form 8-A filed by Annaly on July 12, 2016).
23.1	Consent of Ernst & Young LLP.
99.1	Press release, dated July 12, 2016.

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EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-209447 and 333-200811) and Form S-8 (No. 333-169923) of Annaly Capital Management, Inc. of our report dated February 24, 2016 with respect to the consolidated financial statements of Hatteras Financial Corp., and the effectiveness of internal control over financial reporting of Hatteras Financial Corp., which appears in Hatteras Annual Report (Form 10-K) for the year ended December 31, 2015 which is incorporated by reference in this Current Report on Form 8-K.

/s/ Ernst & Young LLP

Charlotte, North Carolina

July 12, 2016

EX-99.1

Exhibit 99.1

Annaly Capital Management, Inc. Completes Exchange Offer for Hatteras Financial Corp.  Common Stock

Merger to Close July 12, 2016

New York, NY, July 12, 2016 — Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly”), announced today that it has completed the previously announced exchange offer for all of the outstanding shares of common stock of Hatteras Financial Corp. (NYSE: HTS) (“Hatteras”).

The exchange offer to acquire all of the outstanding shares of Hatteras common stock expired at 5:00 p.m., Eastern Time, on July 11, 2016.  The depositary for the exchange offer has informed Annaly that a total of 70,066,823 shares of Hatteras common stock, representing approximately 74.12% of Hatteras’ outstanding common stock, were validly tendered and not validly withdrawn in the exchange offer.  All shares that were validly tendered and not validly withdrawn have been accepted for payment in accordance with the terms of the exchange offer and applicable law.

Of the shares tendered into the exchange offer, 19,132,243 shares made an election to receive the mixed consideration, 3,000,559 shares made an election to receive the all-cash consideration, and 47,934,021 shares made an election to receive the all-stock consideration.

·Hatteras common stockholders who elected to receive the mixed consideration or tendered without a valid election will receive the mixed consideration, which consists of $5.55 in cash and 0.9894 shares of Annaly common stock per share of Hatteras common stock;

·Hatteras common stockholders who elected to receive the all-cash consideration will receive $15.85 in cash per share of Hatteras common stock; and

·Hatteras common stockholders who elected to receive the all-stock consideration will be subject to proration at a rate of approximately 69%, and will receive their consideration in the form of $15.85 in cash for each share not accepted for the all-stock election due to proration and 1.5226 shares of Annaly common stock per share of Hatteras common stock for shares that were accepted for the all-stock election.

Hatteras common stockholders will receive cash in lieu of fractional shares of Annaly common stock.

Pursuant to the merger agreement, dated as of April 10, 2016, among Annaly, Hatteras and Ridgeback Merger Sub Corporation, a wholly owned subsidiary of Annaly (“Merger Sub”), Annaly intends to complete the acquisition of Hatteras through a second-step merger of Hatteras with and into Merger Sub without a vote of Hatteras’ stockholders, pursuant to Section 3-106.1 of the Maryland General Corporation Law (the “Merger”).  In accordance with Maryland law, the Merger is expected to be consummated on July 12, 2016.  Upon consummation of the Merger, Hatteras will become a wholly owned subsidiary of Annaly.  In connection with the Merger, all shares of Hatteras common stock not validly tendered into the exchange offer will be cancelled and converted into the right to receive merger consideration in the same amounts offered in the exchange offer.  Holders of these shares will have the opportunity to elect among the mixed consideration, the all-cash consideration and the all-stock consideration, subject to proration, as described in the prospectus/offer to exchange, dated July 8, 2016, filed by Annaly with the Securities and Exchange Commission in connection with the transaction.  In addition, upon consummation of the Merger, all of the outstanding shares of Hatteras 7.625% Series A Cumulative Redeemable Preferred Stock (the “Hatteras Series A Preferred Stock”) will be cancelled and converted into the right to receive one newly issued share of Annaly’s 7.625% Series E Cumulative Redeemable Preferred Stock, which will have substantially the same terms as the existing terms of the Hatteras Series A Preferred Stock.

As a result of the acquisition, shares of Hatteras common stock and Hatteras Series A Preferred Stock will cease to be traded on the NYSE.

Wells Fargo Securities and Sandler O’Neill + Partners, L.P. are serving as financial advisors to Annaly, and Wachtell, Lipton, Rosen & Katz serves as legal counsel to Annaly.

About Annaly

Annaly’s principal business objectives are to generate net income for distribution to its shareholders from its investments and

capital preservation. Annaly is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”).  Annaly is managed and advised by Annaly Management Company LLC.

Forward-Looking Statements

This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements which are based on various assumptions (some of which are beyond our control) and may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” or similar terms or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed securities and other securities for purchase; the availability of financing and, if available, the terms of any financings; changes in the market value of our assets; changes in business conditions and the general economy; our ability to grow our commercial business; our ability to grow our residential mortgage credit business; credit risks related to our investments in credit risk transfer securities, residential mortgage-backed securities and related residential mortgage credit assets, commercial real estate assets and corporate debt; our ability to consummate any contemplated investment opportunities; changes in government regulations affecting our business; our ability to maintain our qualification as a REIT for federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; the timing to consummate the Merger, and potential business disruption following the acquisition of Hatteras. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.

Additional Information and Where to Find It

This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares, nor is it a substitute for the exchange offer materials that Annaly and its merger subsidiary have filed with the Securities and Exchange Commission (“SEC”). Annaly and its merger subsidiary have filed a tender offer statement on Schedule TO, Annaly has filed a registration statement on Form S-4, and Hatteras has filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with respect to the exchange offer. THE EXCHANGE OFFER MATERIALS (INCLUDING AN OFFER TO EXCHANGE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER EXCHANGE OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT CONTAIN IMPORTANT INFORMATION. HATTERAS SHAREHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF HATTERAS SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING EXCHANGING THEIR SECURITIES. The Offer to Exchange, the related Letter of Transmittal and certain other exchange offer documents, as well as the Solicitation/Recommendation Statement, are available to all holders of Hatteras common stock at no expense to them. The exchange offer materials and the Solicitation/Recommendation Statement are available for free at the SEC’s website at www.sec.gov. Additional copies may be obtained for free by contacting Annaly’s Investor Relations department at 1-888-8Annaly (1-888-816-6159).

Contacts

Annaly Capital Management, Inc.

Investor Relations

1-888-8Annaly

www.annaly.com