TierOne Corp. of Lincoln, Neb., announced late Thursday that its board has terminated its planned sale to CapitalSource Inc., a Chevy Chase, Md., real estate investment trust.
CapitalSource had announced its deal to acquire the $3.5 billion-asset TierOne for $652 million, or $34.46 per share, in cash and stock in May. But the deal had been on shaky ground for months, as both companies' share prices plummeted and TierOne's credit quality weakened.
On Feb. 17 the deal hit a crucial point set in the contract that allowed either company to back out without penalty if it had not closed.
At that time the $3.5 billion-asset TierOne said it remained committed to closing the deal, while CapitalSource's board gave John Delaney, its chairman and chief executive, the authority to terminate the transaction or negotiate new terms.
On March 3, TierOne announced that it had lost $18 million in the fourth quarter as its volume nonperforming loans more than tripled from a year earlier, to $128.5 million, or 4.32% of total loans.
In addition to terminating the deal Thursday, TierOne said that its board had authorized it to repurchase up to 10% of its stock, or 1.8 million shares.
