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Renasant contended with a Southeastern community bank in Brand Group deal

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Renasant contended with a Southeastern community bank in Brand Group deal

Tupelo, Miss.-based Renasant Corp. competed with a Southeastern community bank in a race to acquire Lawrenceville, Ga.-based Brand Group Holdings Inc., according to a Form S-4 filed June 1.

During the summer of 2017, Brand CEO Bartow Morgan Jr. and members of the company's executive management determined that the company would need to raise capital through a private placement or conduct an IPO by the end of 2018 to meet its loan growth expectations. Alternately, the company could consider other strategic alternatives, such as a merger of equals or merging with a larger financial institution.

Representatives from BSP Securities LLC, which was discussing the matter with Morgan, spoke to E. Robinson McGraw, Renasant's then-Chairman and CEO, who expressed his interest in considering a strategic merger with Brand. With assistance from financial adviser Keefe Bruyette & Woods Inc., Renasant's team identified Brand and several other financial institutions with significant exposure in the Atlanta market as potential merger partners.

In October 2017, Brand's board established a special committee of its members to consider the company's capital and other strategic alternatives. Evercore was engaged to assist in evaluating the interest of five potential merger partners. If such a transaction was not available, the committee authorized the company to pursue an IPO.

Morgan met with McGraw in early November 2017 to potentially open discussions over a possible merger. No specific merger terms were proposed.

Evercore contacted all five potential merger partners, including Renasant and another large unnamed Southeastern community bank to discuss a potential transaction. One of the five said it was not interested in a potential deal at that time. After Brand's management held separate meetings with the remaining four, two more, other than Renasant and the Southeastern community bank, said they too were not interested in pursuing a transaction.

Renasant and the Southeastern community bank each submitted preliminary, nonbinding indications of interest with respect to a merger with Brand. Renasant proposed to acquire Brand for between $1,450 and $1,550 per share of Brand's common stock in an all-stock merger. It also agreed to cash out all outstanding options to purchase Brand's common stock, for a total transaction value between $450.9 million and $483.5 million.

Evercore asked Renasant and the Southeastern community bank to submit any proposed revisions with regard to a deal. On March 9, Renasant submitted a revised offer with consideration valued at $1,513 per share of Brand's common stock in an all-stock merger, and agreed to cash out all outstanding options to purchase the stock, for a total transaction value of $471.5 million. The Southeastern community bank also submitted a revised offer.

Brand's board authorized and directed Morgan and Evercore to continue negotiations with Renasant. Evercore informed the Southeastern community bank that its proposal was inadequate, and the bank declined to enhance its proposal.

Renasant submitted a final offer for a deal with consideration valued at $1,554.35 per share of Brand's common stock. Renasant also agreed to cash out all outstanding options to purchase Brand's common stock at the difference between the exercise price of each such option and $1,550. The total transaction value expressed in this indication of interest was $484.8 million.

On March 28, the boards of both Brand and Renasant held separate meetings to discuss the merger agreement, and the companies executed the merger agreement on the same day.