Pine Bluff, Ark.-based Simmons First National Corp. is acquiring all the outstanding common stock of Stillwater, Okla.-based Southwest Bancorp Inc. in a deal valued at roughly $564.4 million.
Under the deal terms, each Southwest common share will be converted into the right to receive 0.3903 of a Simmons common share and $5.11 in cash. Overall, Simmons would pay $95.0 million in cash and 7.25 million shares of its common stock, it said in an investor presentation.
The deal price is 2.1x tangible book value; 25.1x Southwest Bancorp's estimated 2017 earnings of $1.19 per share; and 15.2x its estimated 2018 EPS, with synergies, of $1.98, the presentation noted. Simmons expects cost savings of $21.5 million pretax per year and a one-time merger-related cost of $12.8 million after tax. The initial tangible book value dilution is anticipated to be less than 2.5% with an earnback period of less than 2.5 years.
SNL's calculations, meanwhile, has the deal's per-share value pegged at 200.0% of book, 212.0% tangible book and 36.2x last-12-month earnings. The deal price is also 33.4x last-12-month core earnings, 29.14% of deposits and 23.00% of assets, with a tangible book premium-to-core deposits ratio of 18.74%.
For comparison, SNL valuations for bank and thrift targets in the Southwest 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-month earnings, on an aggregate basis. On a per-share basis, they averaged 156.78% of book, 156.78% of tangible book and had a median of 11.31x last-12-month earnings.
The one-day premium on the deal is 25.03%, based on Southwest Bancorp's closing price of $24.30 per share on Dec. 13. The one-month premium is 39.69%, based on the closing price of $21.75 per share on Nov. 14.
The deal is set to close during the third quarter of 2017, and is subject to regulatory and shareholder approval. After the transaction closes, Southwest unit Bank SNB will continue operating as a separate subsidiary of Simmons for an interim period until it is merged into Simmons Bank.
The transaction will allow Simmons to enter Oklahoma with 19 branches, to be ranked No. 10 with a 1.84% share of approximately $83.72 billion in total market deposits. It will enter Texas with five branches, to be ranked No. 250 with a 0.02% share of approximately $764.52 billion in total market deposits. The deal will also see Simmons expand in Kansas by four branches, to be ranked No. 73 with a 0.24% share of approximately $82.86 billion in total market deposits. And it will enter Colorado with three branches, to be ranked No. 115 with a 0.04% share of approximately $125.26 billion in total market deposits.
Simmons First National's Chairman and CEO George Makris Jr. said that Mark Funke, Southwest Bancorp's president and CEO, will become president of the new Southwest division of Simmons Bank, responsible for the banking operations in Oklahoma, Texas, Colorado and Kansas.
Simmons First National was advised by Stephens Inc. while Southwest Bancorp was advised by Keefe Bruyette & Woods Inc.