Hampton Roads Bankshares in Virginia Beach juggled a search for a new chief executive while also arranging for its eventual merger with Xenith Bankshares in Richmond, Va.
The $2.1 billion-asset Hampton Roads started talking to the $1 billion-asset Xenith about a combination shortly after Douglas Glenn resigned as its president and chief executive in early September, the companies disclosed in a recent regulatory filing.
At the same time, Hampton Roads was in the early stages of a CEO search that its board expected to last four to six months. The board decided on several occasions to keep looking for a successor for Glenn – Charles Johnson, the company's chairman, was interim CEO – as it negotiated with Xenith. The search was finally suspended in mid-January, less than a month before the companies agreed to their $107 million merger.
The merger is unique because, while Hampton Roads is technically the acquirer, Xenith will retain its name and headquarters. Gaylon Layfield 3rd, Xenith's president and CEO, will retain those titles when the deal closes in the third quarter.
The filing discloses that Hampton Roads had already considered a merger – hiring Sandler O'Neill as its financial adviser in early May to evaluate strategic alternatives – though there were no disclosures about talks with interested parties. In addition, Xenith's board in prior years had evaluated Hampton Roads as a possible merger partner.
Overall, the filing indicates a rather seamless negotiation between Xenith and Hampton Roads that began when Layfield contacted Johnson in October before resulting in a deal announcement on Feb. 10.
There was some back and forth over the exchange rate. Hampton Roads originally proposed 3.8 shares of its stock for each Xenith share; Layfield at Xenith said he was unwilling to take that ratio to his board. The companies finally settled on 4.4 shares of Hampton Roads stock for the exchange.