Home Capital, the Canadian company, said on Monday that the mortgage lender will be acquired by Smith Financial Corp in a deal valued at 1.7 billion Canadian dollars (1.27 billion US dollars).

The all-cash deal at 44 Canadian dollars per share with the family office of financial entrepreneur and co-owner of the proxy advisory firm Glass Lewis, Steven Smith, is nearly a 63 percent premium over Home Capital's closing price on Friday.

The deal comes amid weak demand for mortgages due to the sharp rise in borrowing costs, with smaller lenders struggling to gain traction in Canada where the six major banks dominate about 80 percent of the mortgage market share.

Earlier this month, Home Capital announced a 21 percent decline in third-quarter profits, with the Toronto-based lender rejecting a takeover offer over 28.60 Canadian dollars per share from an unnamed buyer, saying it undervalued the company.

In 2017, Warren Buffett's Berkshire Hathaway extended a lifeline to Home Capital by purchasing a 20 percent stake and providing a 2 billion Canadian dollar credit line when investors withdrew more than 90 percent of funds from the high-interest savings account.

The deposit outflows resulted from fallout from the company's alleged concealment of mortgage fraud. It later admitted the fraud and reached a settlement with the Ontario securities regulator, where Buffett sold the stake in the company in 2018.

The deal with Smith Financial includes a "go-shop" period until December 30, during which Home Capital will be allowed to seek other bids. Also, the lender's name will be delisted after nearly four decades of being a public company upon deal closing, expected mid-next year.

The company also said that if it is not closed by May 20, shareholders will be entitled to an additional payment of 25 Canadian cents per share for every three months of delay.