The fight for M&F Bancorp isn’t over yet, but the Durham, N.C., company’s board made clear where it stands.
M&F Bancorp’s board unanimously reaffirmed its support for the pending sale to Optus Financial in Columbia, S.C. It also formally rejected Triad Business Bank’s fourth proposal, concluding the Greensboro, N.C., bank’s offer is not superior to the Optus deal and is not reasonably likely to lead to one.
At the same time, M&F will again delay the shareholder vote. The special meeting scheduled for Oct. 20 will be moved to Nov. 4 so shareholders can review a new proxy supplement describing Triad Business Bank’s latest offer.
M&F and Optus announced their deal in July. Optus agreed to pay more than $105 million, creating a company with $1.3 billion in assets operating under the Optus name. The merger would form the largest African-American-owned financial institution in the country.
The M&F Bank brand, in place since 1907, would be retired and the headquarters would move to Columbia.
That opened the door for Triad Business Bank, which has made four offers since August. The pitch is that M&F should keep its name and charter. Its proposed structure would keep M&F Bancorp as the holding company over both banks, each with its own charter.
The Optus vote was supposed to happen Oct. 7. Shareholders did not approve the Optus agreement that day, and the meeting was moved. M&F says a preliminary count showed an overwhelming majority of shares planned to vote yes, and the adjournment was solely to give shareholders time to review disclosures about Triad’s proposals.
On Oct. 15, Triad Business Bank went public. It identified itself as “Party A,” published its terms, and argued the board had kept shareholders in the dark.
M&F’s board called several of Triad Business Bank’s claims incomplete or misleading. Its main arguments:
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The cash is limited. Triad offers $53.50 in cash, but only for up to a quarter of shares, prorated if more holders elect cash. Most shares would be converted into stock, and some holders could get less than 1.25 shares, so Triad Business Bank keeps majority ownership. Optus offers up to $53.30 a share, all cash: $46.57 at closing plus $6.73 if M&F’s Series E preferred is redeemed before or within 12 months of closing.
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Triad Business Bank’s values depend on projections. The board says Triad’s valuation depends on a Nasdaq listing that the suitor only “targets,” and uses multiples above peer levels. It notes Triad Business Bank’s share price has fallen more than 30% over six years and that its results have been largely unprofitable.
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The payoff would take years. Triad’s numbers assume M&F shareholders hold for about five years, likely into 2032, with no dividends.
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M&F would be the junior partner. With a full cash election, M&F holders would own about 47.4% of the combined company and Triad holders about 52.6%.
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The franchise could be at risk. The board expects a Triad combination could drive away deposits and key relationships, and it called a multi-bank holding company unusual in the Southeast.
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Triad’s offer isn’t a deal. It’s a non-binding indication of interest that would still need due diligence, a definitive agreement and new regulatory approvals. All Optus regulatory applications have already been filed.