Iberia Bank Corporation (IBKC - Free Report) and Georgia Commerce Bancshares, Inc. jointly announced a definitive agreement under which the former will acquire the latter for approximately $195 million.
According to the terms of the merger, each common share of Georgia Commerce will earn 0.6134 share of Iberia Bank common stock. The values of Georgia Commerce’s 4.6 million outstanding shares and 262,189 outstanding stock options, based on the closing value of Iberia Bank’s stock on Dec 5 which was $65.21, amount to $189 million and $5.7 million, respectively.
The pre-tax transaction cost of the deal is estimated to be $20.7 million.
Upon completion of the transaction, Mark W. Tipton, chairman and CEO of Georgia Commerce, will become the Executive Vice President and Georgia Regional President for Iberia Bank’s Georgia franchise, while Rodney L. Hall, President of Georgia Commerce, will serve as Executive Vice President and Atlanta Market President.
The acquisition, which is expected to close in the first half of 2015, received approvals from the board of directors of both parties concerned. However, it is still subject to customary closing conditions including approval from Georgia Commerce’s shareholders.
The acquisition will enable Iberia Bank to extend its footprints in Atlanta – the fourth largest Metropolitan Statistical Area (“MSA”) in the South which now makes Iberia Bank operational in all of the top five MSAs in that region. Financially, Iberia Bank expects the deal to be accretive to its earning per share in 2016 and 2017 by 1.6% and 5%, respectively. Moreover, the anticipated internal rate of return is more than 20%, which is well in excess of the cost of capital.
Iberia estimates its acquisition-related pre-tax expense reductions, to be approximately 20% of Georgia Commerce’s run-rate expenses, which it expects to achieve within six months of closure of the acquisition.
This, along with strong credit and rich asset quality of Georgia Commerce, makes the transaction extremely beneficial for Iberia Bank.
Iberia Bank’s financial strength, scope and experience in Atlanta will help Georgia Commerce create value for its clients and shareholders.
Recent acquisition announcements made by Iberia Bank include Old Florida National Bancorp and Florida Bank Group Inc. in Oct 2014, both of which are yet to be closed.
Iberia Bank currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the finance space include Fidelity Southern Corp. (LION - Free Report) , First Bancshares Inc. (FBMS - Free Report) and Investar Holding (ISTR - Free Report) – each sporting a Zacks Rank #1 (Strong Buy).