FB Financial Tweaks Terms of Clayton Purchase
Move looks to settle Fed questions related to seller’s stake in another banks
As published in the Nashville Post
AUTHORS Geert De Lombaerde
The leaders of FB Financial have agreed to alter the structure of their $284 million deal to buy two banks from Knoxville entrepreneur Jim Clayton.
Per the amended acquisition structure, downtown-based FB will now pay Clayton $124 million in cash — in addition to the $79.5 million payment of excess capital — and reduce the number of shares changing hands to about 1.5 million from nearly 5.9 million. In addition, FB execs will have the option to convert all or some of the $60 million subordinated debt part of the deal into cash.
The changes are intended to assuage “competitive concerns” by Federal Reserve Board officials about Clayton’s stake in FB and the parent of Apex Bank, a $530 million lender headquartered in Camden, near Paris. Clayton’s holding company owns half of Apex and would have owned about 20 percent of FB, which raised regulators’ eyebrows. With the revised deal, Clayton will own less than 5 percent of FB.
“We expect the acquisition will provide incremental earnings per share accretion in 2018 and 2019, reaching approximately 20 percent annually, versus our 15 percent-plus estimate previously announced in February,” said FB Financial President and CEO Chris Holmes. “Furthermore, we now expect the increased capital will positively impact our pro forma capital ratios relative to the terms of the original structure announced in February while also materially reducing the projected tangible book value dilution at closing.”
Holmes also said the revised terms mean FB should now earn back the capital dilution from the Clayton acquisition by year’s end instead of in late 2018.
To raise the cash they will pay Clayton, Holmes and his team plan to this week sell 4.8 million shares for $33 apiece in a private placement that will net them $152 million.
FB shares (Ticker: FBK) closed Friday trading at $36.91.
FirstBank’s new digital banking platform is now live and you will need to conduct your First-Time Login as the previous online banking system and mobile app are no longer available. Click below for important information and how to videos.