The $17.6 billion-asset Home said in a press
release Wednesday that it will pay $919 million in stock for the $6.3
billion-asset parent of Happy State Bank. The deal, which is expected to close
in the first quarter, priced Happy at 166% of its tangible book value.
Home, the parent of Centennial Bank, will enter
Texas when the deal closes. The company said the transaction positions it to “potentially
acquire additional institutions over time.”
The deal is expected to be 5.5% accretive to
Home’s 2022 earnings per share and 9.2% accretive the following year. It should
also be accretive to Home’s tangible book value per share.
J. Pat Hickman, Happy’s chairman, will join
Home’s board. Mikel Williamson, Happy’s CEO, will join Home’s executive team.
Branches in Texas will be branded as Happy State Bank, a division of Centennial
Bank.
“We have expressed our desire to return to
Texas for several years,” John Allison, Home’s chairman, president and CEO,
said in the release. “We are thrilled to have found such a quality bank to
partner with to make this expansion a reality.”
Home said it expects to incur $55 million in
merger-related expenses. The company plans to cut about a third of Happy’s
annual noninterest expenses.
"Strategically, the deal provides a meaningful entrance into high-growth
Texas markets ... including entrance into Dallas/Fort Worth and Austin ... establishing Home as a dominant Southern
institution," Brian Martin, an analyst at Janney Montgomery Scott, wrote in a note to clients.
Home "will now operating in two of the fastest-growing state in the U.S., leaving it well positioned for positive organic growth and to participate in future consolidation in" Texas and Florida, Martin added.
Piper Sandler and Mitchell, Williams, Selig,
Gates & Woodyard advised Home. Stephens and Alston & Bird advised Happy.
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