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Dec 17 (Reuters) - Mortgage lender UWM Holdings UWMC.N said on Wednesday it will buy Two Harbors Investment TWO.N in an all-stock deal valued at $1.3 billion.

Under the deal, Two Harbors shareholders will receive a fixed exchange ratio of 2.3328 shares of UWM Class A stock for each share of Two Harbors common stock.

This represents a roughly 21% premium to Two Harbors' 30-day volume-weighted average price, based on UWM's December 16 closing price, the companies said.

UWM shareholders will own about 87% of the combined company on a fully diluted basis after the deal closes, while Two Harbors shareholders will hold the remaining 13%. The boards of both companies unanimously approved the transaction.

The deal is expected to close in the second quarter of 2026, pending shareholder and regulatory approvals.

UWM shares fell 2.3% in premarket trading, while Two Harbors Investment shares jumped 9%.

(Reporting by Prakhar Srivastava in Bengaluru; Editing by Tasim Zahid)

((Prakhar.srivastava2@thomsonreuters.com;))