Bank of the Carolinas Corp. in Mocksville, N.C., and Randolph Bank and Trust Co. in Asheboro said they terminated their merger agreement after Randolph failed to get enough shareholder votes to approve the transaction.
North Carolina banking law requires holders of two-thirds of the outstanding shares to back a deal; Randolph secured 60%, the companies said Wednesday.
The deal fell through because Bank of the Carolinas shares had fallen by nearly 35% since it announced in April that it would buy Randolph for about $36 million.
At the time Bank of the Carolinas' shares were trading at $13.84, and under the terms of the deal, Randolph shareholders would have received 2.67 shares of Bank of the Carolinas for each share they own. Bank of the Carolinas' shares hit a 52-week low of $9.06 on Tuesday.
Bank of the Carolinas would have had about $770 million of assets after the purchase. It said it expects to take a charge of $430,000, or 11 cents a share, in the fourth quarter.
This is at least the third time since August that an acquisition agreement has fallen through because of a decline in the buyer's stock price, and falling share prices could affect other deals.
On Wednesday, for example, a large shareholder at TierOne Corp. of Lincoln, Neb., said it would vote against the company's $652 million sale to CapitalSource Inc., a specialized finance company in Chevy Chase, Md., because of a decline CapitalSource's market value. Its shares have fallen about 36% since the deal was announced in May.
