IBERIABANK has agreed to acquire Gibraltar Private Bank & Trust in all stock transaction valued at $223m.
The proposed merger has been approved by the Board of Directors of each company and is expected to close in the first quarter of 2018. Completion of the transaction is subject to customary closing conditions, including the receipt of required regulatory approvals and the approval of Gibraltar's shareholders.
Angel Medina, Jr., President and Chief Executive Officer of Gibraltar, commented, "We are excited to be joining forces with IBERIABANK. Their proven track record of growth, both through acquisitions and organic measures, has put them in a unique position in our markets. Our customers and shareholders will benefit greatly by this transaction."
Daryl G. Byrd, President and Chief Executive Officer of IBKC, added, "We have known Angel and Adolfo at Gibraltar for many years now and are thrilled to be able to announce our combination with their institution. Strategically and financially attractive, this transaction provides another point of leverage in the Florida markets for IBERIABANK and is consistent with the acquisition discussion we had at the IBERIABANK Analyst Investor's Day in September in New York. We believe Gibraltar will complement our recent activities in Southeast Florida, enhancing our capabilities to serve clients in private banking, residential lending and wealth management."
Under the terms of the merger agreement, each share of Gibraltar common stock, including restricted stock awards (whether vested or not vested) will be exchanged for 1.9749 shares of IBKC common stock, subject to certain adjustments provided for in the merger agreement.
Options to acquire Gibraltar common stock, whether or not vested, will be cashed out at the consummation of the merger. Based on the closing share price for IBKC common stock of $80.15, on October 19, 2017, Gibraltar shareholders will receive IBKC shares valued at approximately $158.29 per Gibraltar common share and IBKC expects to issue approximately 2.79 million shares of IBKC common stock in the transaction, valuing the transaction at $223 million for the equity, or 1.56x tangible book value at June 30, 2017.
IBKC currently estimates annual pre-tax expense reductions associated with the transaction will be in excess of 60% of Gibraltar's run-rate expenses in 2017. The expense savings are anticipated to be fully achieved, on a run-rate basis, within six months of closing. Acquisition and conversion related costs (including lease termination costs) are estimated to be approximately $34.2 million on a pre-tax basis.
The transaction is expected to be 2%-3% accretive to IBKC's fully diluted earnings per share ("EPS") in 2019 and 2020.
The transaction is anticipated to have no material effect on IBKC's capital ratios which are expected to remain well in excess of adequate regulatory levels and consistent with past operating levels of the company. In addition, the transaction is expected to be less than 1% dilutive to tangible book value per share on a pro forma basis at closing.
The tangible book value dilution is anticipated to be earned back in approximately two years after closing. The estimated internal rate of return for the transaction is expected to be greater than 20%, and, therefore, in excess of IBKC's cost of capital.