Friday, May 27, 2022

Seacoast-Apollo exclusively negotiated their merger

Seacoast Banking Corp. of Florida’s courtship of Apollo Bancshares in Miami began last summer, leading to exclusive negotiations between the two companies.

The $10.9 billion-asset Seacoast announced its $168.3 million acquisition of the $1 billion-asset Apollo on March 29. Apollo had agreed in 2019 to sell itself to Suncoast Credit Union but the deal was terminated in the early days of the coronavirus pandemic. 

Conversations that led to the Seacoast deal began in August 2021 when Chuck Shaffer, Seacoast’s chairman and CEO, met with Eddie Arriola, his counterpart at Apollo, according to a regulatory filing for the pending transaction. During the meeting, the bankers discussed Seacoast’s interest in a deal, along with potential terms.

Seacoast signed a confidentiality agreement on Dec. 27 to receive access to confidential information about Apollo. 

Seacoast on Jan. 5 sent a proposal that valued Apollo at $177.5 million. A letter of intent was signed on Feb. 10, granting Seacoast exclusivity to negotiate with Apollo until April 15. 

Seacoast conducted due diligence in February and March, while Apollo handled its reverse due diligence in March. The boards of both companies approved the merger on March 29. 

Seacoast expects the deal to be 8% accretive to its 2023 earnings per share. It should take a little more than two years for Seacoast to earn back an expected 2.5% dilution to its tangible book value.  

Seacoast plans to cut about 39% of Apollo's annual noninterest expenses. The company expects to incur about $16 million of merger-related expenses. 

“The proximity of [Seacoast] and Apollo and the logical geographic scope of the combined bank should position the combined bank for continued organic strategic growth in the combined market area,” the recent filing said. 

“This merger creates an excellent opportunity to expand [Seacoast’s] presence in the Miami … banking market and continue expanding in key markets,” the filing added. 

Arriola will serve as Miami-Dade market executive, based on his employment agreement with Seacoast. He will receive an annual base salary of $325,000 and will be eligible in 2022 for a bonus of at least $165,000, the filing said. 

Seacoast disclosed that the aggregate value of Arriola’s vested stock award, restricted stock award and change-in-control payment will be almost $4.3 million.

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