A two-day golf trip kickstarted conversations that led to the pending sale of Reliant Bancorp in Brentwood, Tenn., to United Community Banks in Blairsville, Ga.
The $19.6 billion-asset United agreed on July 14 to buy the $3.1 billion-asset Reliant for $517 million.
Before we dig into the background, based on a recent regulatory filing tied to the merger, here is a recap the deal’s financial details.
- The deal, which is expected to close in the first quarter, priced Reliant at 194.1% of its tangible book value.
- The acquisition is expected to be 6.1% accretive to United’s 2022 earnings per share and 8.5% accretive the next year. It should take three years for United to earn back any dilution to its tangible book value.
- United plans to cut about 31% of Reliant’s annual noninterest expense. The company expects to incur $34 million of merger-related expenses.
- DeVan Ard Jr., Reliant’s chairman and CEO, is expected to become United’s Tennessee state president.
Now for the history of the pending transaction:
- Talks between the companies began in March when Lynn Harton, United’s president and CEO, and Ard met in Ridgeland, S.C., for two days of golfing.
- Reliant’s directors on March 17 designated the board’s executive committee to provide strategic direction and guidance throughout the process.
- Between late March and early April, Reliant’s investment bank contacted four financial institutions, including United, to gauge their interest in a possible deal. At the same time, Reliant populated a virtual data room so suitors could conduct due diligence.
- United and one other financial institution expressed interest in receiving nonpublic information about Reliant. Each signed confidentiality agreements on April 6. The timing was “less than ideal” for the other two companies that were contacted, the filing said.
- United and the other suitor were asked to provide a preliminary indication of interest by May 3.
- During a May 4 meeting, Reliant’s board authorized Ard to move to the next phase of negotiations with United and the other bidder. Each were asked to provide final proposals by June 7. They were also given an initial draft of the merger agreement with instructions to comment on it by June 1.
- United’s final offer involved all stock and valued Reliant at $33.95 a share. The company also said it had “effectively concluded its due diligence” and was in position to announce a deal by mid-July.
- The other bidder proposed an all-stock acquisition valued at $33.87 a share. The offer included two board positions. The institution also said it could announce a deal by mid-July.
- Reliant’s board decided during a June 9 meeting to further negotiate the terms of a non-binding letter of intent with United. The letter of intent, signed on June 11, granted United exclusivity through July 15.
- Each company’s board unanimously approved the acquisition on July 14. It was announced later that day.