Unsolicited bid, market challenges led to Comunibanc sale

Comunibanc in Napoleon, Ohio, began to seriously explore selling itself after receiving an unsolicited offer last summer from an unnamed bank.

The $329 million-asset parent of Henry County Bank would agree in January to be sold to Civista Banchares in Sandusky, Ohio, for $50.2 million in cash and stock. The deal is expected to close by the end of June. 

Comunibanc was considering its strategic alternatives when it received the unsolicited offer on July 12, 2021, according to a regulatory filing tied to its pending sale to the $3 billion-asset Civista.

Comunibanc “realized that remaining independent would be contingent upon its ability to grow into new markets, significantly increase the size of its loan portfolio, find and retain new lenders and senior management and create liquidity for its shareholders,” the filing said. 

The unsolicited offer proposed that Henry County Bank would be run as an affiliate and that Comunibank’s management would remain in place. The proposed price, while a premium to Comunibanc’s stock price at the time, was below the range that its investment bank had suggested could be obtained through a sale. 

While the goal was to stay independent, Comunibanc’s executives looked into modifying the company’s strategic plan to see if doing so, while returning a higher level of profitability to shareholders, would be feasible. 

Given a number of challenges, the board decided to ask the unnamed bank to increase its offer. The suitor made a new offer with a “more traditional merger structure” only to return in mid-October with another pitch that had a lower amount than the second proposal. 

The board “considered the revised offer and the alternative of remaining independent, neither of which seemed a strong option for shareholders,” the filing said. That led the company to reach out to three other candidates, including Civista. 

Civista and another unnamed bank presented offers that Comunibanc’s board reviewed on Nov. 12. The board approved negotiating exclusively with Civista with a push to get the offer above $60 a share.

Civista and Comunibanc signed a 60-day exclusivity agreement on Nov. 12 with a targeted price of $60.25 a share. 

Comunibanc’s board unanimously approved the sale on Jan. 7. The merger agreement was finalized three days later. 

The deal priced Communibanc at 152% of its tangible book value. 

“We have known the Comunibanc team for a very long time and have always admired the franchise and their strong and stable presence in their local communities,” Dennis Shaffer, Civista’s president and CEO, said in a press release announcing the deal. 

One Comunibanc director will join the Civista Bank board. 

The deal should be 10% accretive to Civista’s 2023 earnings per share. It should take less than three years for Civista to earn back any dilution to its tangible book value. 

Civista plans to cut about 40% of Comunibanc's annual noninterest expenses, or roughly $3.2 million. The company expects to incur $5 million of merger-related expenses.