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National Commerce asked CenterState Bank Corp. to beef up offer terms

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National Commerce asked CenterState Bank Corp. to beef up offer terms

Birmingham, Ala.-based National Commerce Corp. asked Winter Haven, Fla.-based CenterState Bank Corp. to increase its share exchange ratio offer in its acquisition proposal as a condition to gain its agreement.

Talks of a potential CenterState Bank Corp. and National Commerce merger started in June 2018, when CenterState Bank Corp. executives discussed the strategic rationale of a business combination. On Oct. 15, 2018, both CenterState Bank Corp. and National Commerce executives discussed issues such as the timeline of a business combination, anticipated deal costs, financial metrics of a business combination valued at more than $500 million.

Four days later, CenterState Bank Corp. submitted a preliminary, nonbinding letter of intent to National Commerce which included an exchange ratio of 1.6 CenterState Bank Corp. common shares to be issued for each National Commerce common share; up to four National Commerce directors to be appointed to CenterState Bank Corp.'s board; and the appointment of National Commerce CEO Richard Murray IV as CEO of CenterState Bank NA and National Commerce CFO William Matthews V to the same role both in CenterState Bank Corp. and CenterState Bank.

Keefe Bruyette & Woods Inc., the financial adviser of National Commerce, suggested that the share exchange ratio should be increased before National Commerce submitted the nonbinding letter of intent to its board. On Oct. 22, 2018, National Commerce received the revised proposal, which increased the share exchange ratio to 1.65 common shares and reduced the number of National Commerce directors to be appointed in CenterState Bank Corp.'s board to two.

The next day, National Commerce's board met to discuss CenterState Bank Corp.'s proposal. They determined that in comparison to other financial institutions in the southeastern U.S., CenterState Bank Corp. has a superior demographic profile and greater cost savings due to National Commerce's greater branch overlap with the Winter Haven, Fla.-based company.

On Oct. 29, 2018, the final letter of intent was executed, with terms such as an exchange ratio of 1.65 common shares for each National Commerce common share, three National Commerce directors to be appointed to CenterState Bank Corp. and CenterState Bank's boards, an additional National Commerce director to serve on CenterState Bank's board and a 30-day exclusivity provision.

Necessary board approvals were subsequently obtained and the $850.4 million all-stock deal was announced Nov. 26, 2018.