Conway, Ark.-based Home BancShares Inc. agreed to acquire Pompano Beach, Fla.-based Stonegate Bank in a stock-and-cash transaction worth approximately $778.4 million.
The overall deal value implies a purchase price of $49 per share, where Stonegate shareholders will receive $50.0 million in cash and approximately $699.8 million in Home common stock. In addition, Stonegate's outstanding stock options holders will receive approximately $28.6 million in cash for cashed-out options immediately before the merger.
SNL calculates the deal value to be 196.8% of book, 240.6% of tangible book, 19.7x estimated EPS and 22.9x earnings, on a per-share basis. It is also 20.8x last-12-month core earnings, 31.80% of deposits and 26.83% of assets. The tangible book premium is 21.00% of core deposits.
For comparison, offers for bank and thrift targets in the Southeast between March 27, 2016, and March 27, 2017, averaged 138.63% of book, 146.10% of tangible book and had a median of 20.23x last-12-month earnings, on an aggregate basis. Per-share, they averaged 153.76% of book, 168.47% of tangible book and had a median of 21.90x last-12-month earnings.
Pro forma for recently closed Insignia Bank deal, Stonegate has approximately $3.1 billion in total assets, $2.5 billion in total loans, and $2.7 billion in deposits, as of Dec. 31, 2016. The company has 25 branches in key Florida markets with significant presence in Broward and Sarasota counties, according to the press release. SNL data shows that Stonegate has 29 locations included in the FDIC's Summary of Deposits, excluding limited service loan production offices or limited service messenger offices.
The Stonegate announcement concludes Home's mysterious and long-hinted deal and rapidly adds distance between it and the recently crossed $10 billion asset threshold. The pro forma company will have $13.5 billion in assets.
In addition, the combined entity is expected to have $10.3 billion in total loans, $10.0 billion in deposits, 1,942 total employees and 176 branches. Home will be ranked No. 17 with a 1.04% share of approximately $540.56 billion in total market deposits. It also expects the transaction to help diversify its balance sheet and sources of funds.
David Seleski, president and CEO of Stonegate, will join Centennial Bank in an executive role, after deal completion.
Home management called Stonegate the "crown jewel" of Florida banking and expects to extract at least 34% of cost-saves from the deal. The figure could be much higher. Following its close, Home's Florida footprint will be larger than its footprint in its home state of Arkansas.
Arkansas Governor Asa Hutchinson was present at the initial deal announcement, and congratulated Home management on the acquisition. He pointed out that Stonegate has a presence in Cuba, and said he hoped Home would be able to capitalize on that foothold and create a connection between the state's businesses and farmers and its southern neighbor.
The deal, subject to regulatory, Home and Stonegate shareholders' approvals, is expected to close in the fourth quarter.
Mitchell Williams Selig Gates & Woodyard PLLC served as Home's legal adviser and RBC Capital Markets LLC provided financial advice. Stonegate was advised by Keefe Bruyette & Woods and the law firm of Squire Patton Boggs. Hovde Group LLC issued a fairness opinion to the board of Stonegate.
SNL data is an offering of S&P Global Market Intelligence.