Veritex Holdings in Dallas has agreed to buy Green Bancorp in Houston.
The $3.1 billion-asset Veritex said in a press release Tuesday that it will pay $1 billion in stock for the $4.4 billion-asset Green. The deal, which is expected to close in the first quarter, priced Green at 250% of its tangible book value.
It would be the fifth-biggest bank acquisition of 2018 by deal value.
Green “represents a tremendous financial and strategic opportunity,” Malcolm Holland, Veritex’s chairman and CEO, said in the release. “This merger results in a top-10 Texas-based community bank with virtually all of its franchise in the attractive [markets] of Dallas-Fort Worth and Houston.”
“We believe this is the best possible combination for our shareholders, colleagues, and clients,” said Manny Mehos, Green’s chairman and CEO. Mehos is one of three Green directors set to join the Veritex board.
The announcement comes after Green’s management team spent more than a year purging its energy portfolio. Some industry experts saw that effort as a way of improving the company’s valuation if it ever chose to sell itself.
Geoffrey Greenwade, Green’s president, will become the Houston president for Veritex. Terry Early, Green’s chief financial officer, will become Veritex’s CFO.
Veritex said it expects the deal to be about 25% accretive to its earnings per share, excluding merger-related charges. It should take less than three years to earn back the expected 12% dilution to Veritex’s tangible book value.
Veritex plans to cut about 11% of the combined company’s noninterest expenses. The company expects to incur $45 million in merger-related expenses.
Stephens and Covington & Burling advised Veritex, while Keefe, Bruyette & Woods provided a fairness opinion. Goldman Sachs and Skadden, Arps, Slate, Meagher & Flom advised Green.