Porter Bancorp Inc. of Louisville, Ky., moved ahead Friday with plans to buy Citizens First Corp. directly from shareholders, after getting snubbed by the board.
In response, Citizens First of Bowling Green, Ky., urged its shareholders to ignore the unsolicited tender offer, saying it would review the terms of the deal itself.
The $1.7 billion-asset Porter offered to buy Citizens First shares for $9 each, more than double where they had been trading previously. The price equates roughly to Citizens First's book value.
Porter, which already owns a small portion of Citizens First stock, said it went directly to the shareholders to buy the rest only because the board has refused to discuss a possible merger.
The $342 million-asset Citizens First recommended its shareholders take no action. In a press release Friday, it said that it would review and consider Porter's offer with its financial and legal advisers, and within 10 business days, announce its position on the offer and the reasons for its position.
Porter set Dec. 22 as the deadline for interested shareholders to respond to its offer. They have the option of exchanging each Citizens First share for $9 in cash, or 0.5686 Porter shares, or a combination of cash and stock.
Maria L. Bouvette, Porter's president and chief executive officer, said in its press release Friday that she believes merging the two companies "makes compelling business sense," but that Citizens First's board has not responded to an ongoing invitation to discuss the idea. She said the offer of $9 a share should appeal to Citizens First shareholders, if not its board.
"Citizens First stock has not traded at the $9.00 level in over a year and was trading at less than half this amount prior to Porter Bancorp's announcement," she said.
Over the past week, news of Porter's intent to wage a hostile takeover has sent Citizens First's stock soaring from the $4 level where it had hovered for months. The shares closed Friday at $8.44.
Porter announced Oct. 15 that it intended to try to gain control of Citizens First. Porter said then that it already had agreements with some Citizens First shareholders giving it the option to buy their stock. The option agreements would increase Porter's ownership of Citizens First to 19.7%.
Closing on the tender offer and the option agreements depends on Porter's ability to get at least 51% of Citizens First's shares.
Porter said it also must receive regulatory approval to increase its stake in Citizens First. It said it plans to file applications with the Federal Reserve and the Kentucky Department of Financial Institutions soon.