A Texas holding company set up to buy banks and headed by noted bank investor Gerald Ford has struck its first deal.
Hilltop Holdings announced Wednesday that it is buying PlainsCapital of Dallas for roughly $520 million in cash and stock.
PlainsCapital is the holding company for the $5.7 billion-asset PlainsCapital Bank, PrimeLending and FirstSouthwest. Its bank, which has more than 30 branches in the Dallas, Austin and Lubbock, Texas, areas, reported a profit of $71.6 million in 2011, an increase of 39% from the prior year.
Formed in 2010, Hilltop has $528 million in available cash for making deals. The deal would be Hilltop's first and Ford hinted in a news release that it would not be its last.
“We are pleased to embark on this merger with PlainsCapital Corporation,” he said. “We look forward to working with PlainsCapital and pursuing opportunities to grow the company. We envision a long-term and mutually beneficial relationship as we seek to expand the combined company’s footprint.”
PlainsCapital is expected to retain its name and its management team once the deal closes later this year. Gerald Ford would continue to serve as chairman of Hilltop’s board, Jeremy B. Ford would continue as Hilltop’s president and CEO and PlainsCapital’s Chairman and Chief Executive Alan B. White would become vice chairman and chairman of the executive committee at Hilltop.
The deal is the third large acquisition struck in the Lone Star state this year. Cadence Bancorp is in the process of buying Encore Bancshares (EBTX) for $250 million and Prosperity Bancshares (PB) has said it would pay $529 million for American State Financial.
It would also be the second large deal announced in recent weeks involving Gerald Ford. He is a majority owner in Pacific Capital Bancorp (PCBC) in Santa Barbara, Calif., which is being purchased by UnionBanCal for $1.5 billion.
Under the agreement, PlainsCapital shareholders would receive roughly 27.5 million shares of Hilltop common stock and $318 million in cash. Each share of PlainsCapital stock would be converted into the right to receive $9 in cash and .776 shares of Hilltop common stock. Based on Hilltop’s closing price on Tuesday, this deal PlainsCapital’s common stock at $15.18 per share.