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Volatile bank stock prices led to increased offer for First Beeville Financial

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Volatile bank stock prices led to increased offer for First Beeville Financial

First Beeville Financial Corp. and Spirit of Texas Bancshares Inc. amended their merger agreement twice before settling on a final deal value of $64.8 million.

The board of First Beeville and financial adviser Sheshunoff & Co. in early 2018 identified 12 possible buyers of the Beeville, Texas-based company. Spirit of Texas Bancshares emerged the winner, and on June 29, 2018, it submitted a nonbinding letter of intent that it would acquire First Beeville for $12.4 million in cash and 2,156,500 Spirit common shares.

On Aug. 2, 2018, Spirit revised the LOI to make the total purchase price $64.0 million. The number of Spirit common shares would be determined using the volume-weighted average price of Spirit common shares for the 20 trading days before the date the reorganization agreement was signed, and the minimum amount of cash consideration would be $16.0 million.

Spirit's financial adviser, Stephens Inc., reached out to Sheshunoff on Nov. 15, 2018, to discuss the recent volatility of bank stock prices and the potential decrease in overall transaction value resulting from such volatility.

A compromise was negotiated that would increase the price of the transaction to about $64.8 million, increasing the cash portion to about $32.4 million and fixing the number of Spirit common shares to be issued at 1,579,268. Spirit also offered two seats on the Spirit of Texas Bank SSB board to First Beeville representatives.

Conroe, Texas-based Spirit announced its proposed acquisition of First Beeville on Nov. 27, 2018.