VantageSouth Bancshares (VSB) in Raleigh, N.C., and Yadkin Financial (YDKN) in Elkin, N.C., are merging.
Yadkin is considered the legal acquirer, paying $299 million in stock for VantageSouth. However, VantageSouth will be the accounting acquirer in a deal that will create a company with $4 billion in assets. The company will be called Yadkin Financial but will be based in Raleigh. The merger is expected to close by mid-2014.
VantageSouth will also conduct a $46.9 million private placement to new and existing investors, including members of its board. Proceeds will be used to redeem the company's $42.8 million in preferred stock and about 1.3 million in warrants issued to the Treasury Department under the Troubled Asset Relief Program.
Once the transactions are complete, Yadkin shareholders will own about 45.4% of the company, while VantageSouth shareholders will own about 45.5%. Investors in the private placement will own roughly 9.1% of the company.
Scott Custer, president and chief executive at VantageSouth, will have the sale roles once the deal closes. Joe Towell, Yadkin's president and CEO, will become executive chairman. The board will have 14 directors split evenly between the two companies.
"This transaction creates significant value for the shareholders of both companies, provides greater convenience and services for our customers, and transforms the banking landscape in the Carolinas," Towell said in a press release. "We will have meaningful presence in major markets across the state including Charlotte, Raleigh-Durham, Greenville, and Wilmington while continuing our focus on our community markets."
"This merger-of-equals creates a strong community banking franchise with greater competitive advantage, profitability, and future growth potential," Custer added. "The breadth of the joined franchise, combined with the talent of the two teams will create exceptional service for our customers. Our companies have spent considerable time evaluating the philosophies of our two banks and the merits of this transaction and we believe we are creating a franchise with substantial upside."
The companies said they expect to cut about $10 million in annual costs, or roughly 8% of total expenses. They also expect the deal to be more than 15% accretive to their 2015 earnings per share.
Keefe, Bruyette & Woods was financial advisor and rendered a fairness opinion to Yadkin, and Nelson Mullins Riley & Scarborough served as legal counsel. Sandler O'Neill was financial advisor and rendered a fairness opinion to the VantageSouth; Womble, Carlyle, Sandridge and Rice provided legal counsel.