IBERIABANK to acquire Georgia Commerce via merger
The proposed merger of Georgia Commerce with and into IBKC has been approved by the board of directors of each company and is expected to close in the first half of 2015. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of Georgia Commerce's shareholders.
Under the terms of the merger agreement, shareholders of Georgia Commerce will receive IBKC common stock. Georgia Commerce common shares are expected to total approximately 4,727,618 shares at closing, assuming approximately 4,605,186 common shares outstanding and approximately 122,432 common shares associated with the potential exercise of warrants.
Stock Consideration. Each Georgia Commerce common share will be exchanged for 0.6134 share of IBKC common stock, subject to certain adjustments provided for in the merger agreement. Based on IBKC's closing stock price on December 5, 2014, of $65.21 per share, the stock consideration would equate to $40.00 per Georgia Commerce common share, or approximately $189 million.
Stock Option Consideration. At September 30, 2014, Georgia Commerce had approximately 262,189 stock options outstanding with a weighted average exercise price of $18.10 per share. These stock options are anticipated to be in-the-money at closing.
The merger agreement provides that any Georgia Commerce stock options that remain outstanding immediately prior to closing, whether or not vested, will be cashed out at consummation of the merger.
Based on IBKC's closing stock price on December 5, 2014, of $65.21, the cash value for all stock options would total approximately $5.7 million.The cash value of the stock options and stock consideration would equate to aggregate merger consideration of approximately $195 million.
IBKC currently estimates annual pre-tax expense reductions associated with the transaction will be approximately 20% of Georgia Commerce's run-rate expenses in 2014. The expense savings are estimated to be fully achieved, on a run-rate basis, within six months of closing.
Acquisition- and conversion-related costs are estimated to be approximately $20.7 million on a pre-tax basis. The transaction is expected to be 1.6% accretive to IBKC's fully diluted earnings per share (EPS) in 2016 and approximately 5% accretive in 2017.
The transaction is expected to be neutral to IBKC's capital ratios, and to be approximately 1.8% dilutive to tangible book value per share on a pro forma basis at closing. The tangible book value dilution is anticipated to be earned back in approximately 3.5 years. The estimated internal rate of return for the transaction is expected to be greater than 20%, and, therefore, in excess of IBKC's cost of capital. ■