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BankUnited issued a press release confirming rumors that it did in fact engage an investment bank to find a possible buyer for the company, but has opted to stay independent.
January 19 -
Weakened growth prospects and more regulatory hoops could prompt private equity firms to unload bank holdings.
January 18
BankUnited Inc.'s aborted auction turns on its head the old cliché that banks are sold, not bought.
The $11 billion-asset company's surprising invitation for bids and change of heart show how the golden rule of M&A — that deals hinge on a willing seller — does not always apply in a buyer's market, investment banking experts say.
BankUnited, of Miami Lakes, Fla.,
The question across the bank M&A market this week was: What were the veteran dealmakers that control and manage BankUnited thinking?
Only a half dozen or so U.S. banks are big enough and strong enough to acquire a 95-branch bank with a market value of about $2.5 billion. In addition to BB&T and Toronto-Dominion, that list includes PNC Financial Services Group Inc., U.S. Bancorp, Capital One Financial Corp. and M&T Bank Corp.
Most are busy with other deals.
BankUnited rose from the ashes of a failed bank, and it operates in a state still plagued with real estate problems. Its loan book is in pretty good shape, but its deposit levels are so-so as it tries wind down high-cost deposits, experts say. Up until this week, it had been trading at a fairly healthy premium of just over one and a half times its tangible book.
All around it is not exactly the type of low-risk, low-price opportunity the few able buyers are seeking.
"The big banks are very disciplined in looking at acquisitions. That's the takeaway," says one investment banker, not involved in the BankUnited bid process, who requested anonymity to avoid upsetting current or future clients.
Healthy banks that can buy are deeply wary of doing anything that will upset investors and hurt the premium they trade at relative to weaker banks, this banker says. A higher share price is a huge competitive advantage because it gives them more strategic options.
BankUnited reportedly sought bids of $30 or more per share. It is not all that surprising that offers fell short, said multiple investment bankers that handle bank mergers that were not directly involved in the deal.
The overall misfire of the potential sale was a surprise given the pedigree of the players involved, they said.
"This was a complete misread of the market. …It was very poorly done, from start to finish," a different investment banker said.
BankUnited is 50% owned by a blue-chip consortium of private equity firms. They include Blackstone Group, Carlyle Group and WL Ross & Co. BankUnited is the successor to the assets of a failed Florida bank of the same name that they purchased in 2009 and took public two years later. It is run by a veteran dealmaker. Its chief executive, John Kanas, cobbled together North Fork Bancorp. before selling it to Capital One in 2006.
The last week has been something of a black eye for all of them, with an auction that outsiders said appeared to be ill-timed, leaky and rushed. It became public via multiple media reports on Friday and was officially ended late Wednesday, via a BankUnited press release.
"The speculation and uncertainty around a rumored sale, plus the due diligence by potential suitors, brings some concerns as to the true course this ship is being steered in," says Carlos J. Arboleda, managing director of COIaccess, a management consulting firm in Florida. "There's little doubt that they have a solid institution. … However, you can't posture as if you are selling one day, growing organically the next and then change the message again and again. I suspect they will now stick to growing the bank after testing the waters and finding they weren't warm enough yet."
