In Dallas, Veritex Holdings Inc. agreed to buy Sovereign Bancshares Inc. and its unit, Sovereign Bank.
Under the deal, Veritex Holdings will issue 5,117,647 common shares, and will pay around $58.0 million in cash to Sovereign Bancshares shareholders.
SNL calculated the deal value to be 187.5% of book and tangible book, on an aggregate basis. SNL valuations for bank and thrift targets in the Southwest region between Dec. 14, 2015, and Dec. 14, 2016, averaged 141.85% of book, 157.85% of tangible book and had a median of 18.58x last-12-months earnings, on an aggregate basis.
The merger is subject to regulatory and shareholder approvals and is expected to close in the second quarter of 2017, according to a Dec. 14 press release. A termination fee of $4.5 million may be payable by either party under certain circumstances.
As of Sept. 30, Veritex Holdings, the parent of Veritex Community Bank, had $1.27 billion in assets, while Sovereign Bancshares had $1.10 billion in assets. Based on Sept. 30 figures, the combined company will have assets of $2.4 billion, loans of $1.8 billion and deposits of $1.9 billion, the release stated.
Two representatives from Sovereign Bancshares will join the resulting entity's board.
Stephens Inc. acted as financial adviser for Veritex Holdings, while Norton Rose Fulbright US LP served as its legal counsel. Sandler O'Neill Partners LP acted as financial adviser for Sovereign Bancshares, while Fenimore Kay Harrison & Ford LLP served as its legal counsel.
In a separate release, Veritex Holdings said it has begun an underwritten public offering of its common stock. Net proceeds generated in this offering will be used to help fund the cash consideration of the merger, as well as for general corporate purposes. The completion of the merger is subject to this issuance.
Underwriters have an option to purchase additional common shares. Stephens served as sole book-running manager for the transaction, while Sandler O'Neill Partners LP acted as co-manager.