The Bank Slate


Inside Atlanta-area bank’s quest to find a buyer

Piedmont Bancorp in Peachtree Corners, Ga., tried several times to find a buyer before agreeing to be sold to United Bankshares in Charleston, W.Va.

The $30 billion-asset United agreed on May 9 to buy the $2.1 billion-asset Piedmont for $267 million. The deal will give United its first operations in the Atlanta area.

Piedmont first hired an investment bank to explore a potential sale in February 2019, according to a regulatory filing tied to the pending merger. The investment contacted about 20 publicly traded banks to verify valuation expectations. The outreach was low-key – Piedmont didn’t want to spook employees or customers.

Nine banks signed nondisclosure agreements to receive certain financial information. Two would submit written letters of intent; a third verbally indicated potential pricing. Piedmont’s board elected to proceed with one of the letters of intent, but the parties would end their talks due to differences in credit processes.

Piedmont’s investment bank contacted more banks, leading to another verbal indication of interest. “Ultimately, none of the potential offers were deemed to be acceptable from a financial standpoint, and the board … put further conversations on hold,” the filing said.

In December 2020, a publicly traded regional bank expressed interest in an acquisition, executed a nondisclosure agreement, and received certain financial information. Though the bank submitted a written proposal, Piedmont “decided that the price was insufficient and gave the party an opportunity to increase the price.” Piedmont ended talks, mostly due to the proposed offer’s economics for its shareholders.

Talks with United began in 2021, when Monty Watson, Piedmont’s chairman and CEO, was introduced to United and held multiple talks with its senior management team. The banks discussed the possibility of merging, including cultures, customers, credit processes, business mixes and future plans.

“There were significant similarities and strategic alignment,” the filing said. United signed a nondisclosure agreement in June 2021 to allow for limited due diligence.

United decided to pause discussions, leading Piedmont’s board to forgo further talks with potential acquirers due to “the lack of a robust public buyer market.”

From mid-2022 to late 2023, Piedmont considered various M&A options as a buyer or seller. In 2022, it held advanced talks with a potential merger-of-equals partner that “did not come to fruition due to disagreements on key merger terms, including pro forma corporate governance issues.”

Piedmont’s board and management team began to reconsider selling in late 2023, based on a belief that 2024 and 2025 could see “a material uptick” in deal activity “that could provide an opportunity for shareholder liquidity,” the filing said. Piedmont, through its investment banks, contacted four potential buyers, including United.

During the first quarter, United expressed interest in restarting discussions and the banks signed a mutual confidentiality and nondisclosure agreement on March 25.

Two other financial institutions signed nondisclosure agreements and were given access to limited due diligence materials – neither indicated a desire to move forward.

On April 21, United submitted a letter of intent with an 0.3 exchange ratio. Though Piedmont pushed for an increase in the ratio, United wouldn’t budge. Piedmont’s board, at an April 25 meeting, approved the letter of intent.

Each board approved the deal on May 9; it was announced the next day. The deal, which is expected to close in the fourth quarter, priced Piedmont at 145% of its tangible book value.

“We are excited to bring these two great companies together,” Richard Adams Jr., United’s CEO, said in a press release announcing the acquisition.

“We share similar commitments to serving our customers and communities with a relationship-focused approach,” Adams added. “The greater Atlanta area is the perfect addition to United’s footprint, and we look forward to being a part of the vibrant and fast-growing communities there.”

Watson will serve as regional president responsible for United’s Georgia operations, operating under a three-year employment agreement with a one-year renewal option.

Watson, who owns bout 4.8% of Piedmont’s stock, is set to receive a roughly $2 million change-in-control bonus and a $750,000 retention bonus paid in equal installments over three years. He will also be eligible to earn an annual bonus of at least $200,000 a year.

The deal is expected to be 7.6% accretive to United’s 2025 earnings per share. It should take nearly three years to earn back an estimated 3.5% dilution to United’s tangible book value.

United plans to cut a quarter of Piedmont’s annual noninterest expense. The company expects to incur $27.6 million of merger-related expenses.

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