First Miami Bancorp in South Miami, Fla., considered four offers before deciding to negotiate with United Community Banks in Greenville, S.C.
The $24 billion-asset United agreed in February to buy the $1 billion-asset First Miami for $115.9 million in stock.
First Miami initially considered finding a merger partner in early 2020 but put that effort on pause during the earliest days of the pandemic, according to a regulatory filing tied to the United deal.
The effort regained momentum in October 2021 when an unnamed bank presented First Miami with an unsolicited offer. While First Miami decided against pursuing a transaction, the board spend the next few months preparing a list of desired traits for an acquirer.
The board wanted a stock exchange and an opportunity to pay a special dividend by liquidating an equity investment portfolio. Members of the Wirtz family, including Chairman and President W. Rockwell Wirtz, own more than half of the company’s outstanding stock.
First Miami’s investment bank contacted 10 potential buyers last August, including United. Seven expressed an interest and signed non-disclosure agreements, six chose to receive confidential information and three met with members of First Miami’s board.
Three potential buyers submitted initial offers. Those offers, including the unsolicited offer from a year earlier, valued First Miami at $1,147 to $1,500 a share, or roughly $99.9 million to $130.7 million based on First Miami’s disclosed shares outstanding.
United’s offer was the highest.
First Miami’s board decided during a Nov. 7 meeting to negotiate with United, citing the “strong liquidity” of United’s stock “and the belief that United’s culture would be a good fit for First Miami customers and employees.” Discussions with the other suitors were terminated.
The initial draft of the merger agreement was sent to First Miami on Dec. 14. First Miami’s board unanimously approved the merger during a Feb. 9 meeting; the deal was announced after the market’s closed on Feb. 13.
The deal priced First Miami at 162% of its tangible book value.
“I know firsthand the strength and vibrancy of the Miami market from my past career experience,” Lynn Harton, United’s chairman, president and CEO, said in a press release announcing the acquisition. “I look forward to working with the leadership team of FNBSM to continue to grow in one of the most-attractive metropolitan areas in the country.”
United expects the deal to be about 3% accretive to its 2024 earnings per share, excluding transaction costs. Any dilution to its tangible book value should be manageable.
United plans to cut about 30% of First Miami’s annual noninterest expenses, or roughly $7 million. It expects to incur about $10.6 million of merger-related expenses.
First Miami estimated in the regulatory filing that the special dividend could be around $36.2 million, or $415.51 a share, though the valuations of the investment will fluctuate between now and the time of the payout.