Home BancShares in Conway, Ark., has agreed to buy Happy Bancshares in Amarillo, Texas.
The $17.6 billion-asset Home said in a press release Wednesday that it will pay $919 million in stock for the $6.3 billion-asset parent of Happy State Bank. The deal, which is expected to close in the first quarter, priced Happy at 166% of its tangible book value.
Home, the parent of Centennial Bank, will enter Texas when the deal closes. The company said the transaction positions it to “potentially acquire additional institutions over time.”
The deal is expected to be 5.5% accretive to Home’s 2022 earnings per share and 9.2% accretive the following year. It should also be accretive to Home’s tangible book value per share.
J. Pat Hickman, Happy’s chairman, will join Home’s board. Mikel Williamson, Happy’s CEO, will join Home’s executive team. Branches in Texas will be branded as Happy State Bank, a division of Centennial Bank.
“We have expressed our desire to return to Texas for several years,” John Allison, Home’s chairman, president and CEO, said in the release. “We are thrilled to have found such a quality bank to partner with to make this expansion a reality.”
Home said it expects to incur $55 million in merger-related expenses. The company plans to cut about a third of Happy’s annual noninterest expenses.
“Strategically, the deal provides a meaningful entrance into high-growth Texas markets … including entrance into Dallas/Fort Worth and Austin … establishing Home as a dominant Southern institution,” Brian Martin, an analyst at Janney Montgomery Scott, wrote in a note to clients.
Home “will now operating in two of the fastest-growing state in the U.S., leaving it well positioned for positive organic growth and to participate in future consolidation in” Texas and Florida, Martin added.
Piper Sandler and Mitchell, Williams, Selig, Gates & Woodyard advised Home. Stephens and Alston & Bird advised Happy.