425: Business First Bancshares to Acquire Oakwood Bancshares in $85.7 Million Deal

Business First Bancshares will acquire Oakwood Bancshares in an all-stock transaction valued at approximately $85.7 million, expanding its presence in the Dallas market.

Summary

• Business First Bancshares (NASDAQ: BFST) will merge with Oakwood Bancshares in an all-stock transaction.
• The deal is valued at approximately $85.7 million, based on Business First's closing price of $21.57 per share on April 22, 2024.
• Oakwood shareholders will own approximately 13.5% of the combined company after the merger.
• The merger is expected to close in the fourth quarter of 2024, pending regulatory and shareholder approvals.
• Oakwood's CEO and President, Roy J. Salley, will become regional chairman, Dallas of b1BANK.
• Bill Hall, Oakwood Bancshares' chairman, will join the boards of directors of Business First and b1BANK.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook on the merger, highlighting the benefits for both companies and their stakeholders. The unanimous approval by both boards and the expectation of enhanced shareholder value contribute to the positive sentiment.

Positives

• The merger will accelerate Business First's growth in the Dallas market.
• Oakwood will be able to better serve its customers and expand its product offerings through Business First's platform.
• Oakwood shareholders will have an upside opportunity for stock price appreciation.
• The boards of directors of both companies have unanimously approved the transaction.
• The combined company will benefit from the community-oriented cultures and values of both banks.

Risks

• The merger is subject to regulatory and shareholder approvals, which may not be obtained.
• The closing of the transaction is not guaranteed and is subject to customary closing conditions.
• There is a risk of unforeseen issues arising during the integration of the two companies.

Future Outlook

The merger is expected to close in the fourth quarter of 2024, pending regulatory and shareholder approvals. The combined company aims to strengthen its North Texas platform and better serve its customers.

Management Comments

• Jude Melville, acting chairman, president, and chief executive officer of Business First stated, 'Expansion in the Dallas market has been a successful focus of b1BANK for a number of years. We believe the proposed transaction with Oakwood is an effective and efficient way to deepen our customer, employee, and shareholder bases in what is arguably one of Americas strongest markets. Oakwood and B1 share similar community-oriented cultures and values and we look forward to the combination of our respective franchises strengthening our North Texas platform.'
• Roy J. Salley, Chief Executive Officer and President of Oakwood, is confident that this transaction will enhance shareholders' upside opportunity for stock price appreciation.

Industry Context

The acquisition reflects a trend of consolidation in the banking industry, particularly among community banks seeking to gain scale and expand their market presence. Dallas is a strong market for expansion.

Comparison to Industry Standards

• Community bank mergers often involve a premium paid to the target company's shareholders, reflecting the value of the franchise and potential synergies.
• The all-stock nature of the deal aligns with other transactions where the acquiring company seeks to preserve capital and share future growth with the target's shareholders.
• Comparable companies that have undertaken similar acquisitions include South State Corporation's acquisition of Atlantic Capital Bancshares and First Horizon Corporation's merger with Iberiabank.

Management Changes

Stakeholder Impact

• Oakwood shareholders will receive stock in Business First and have the potential for stock price appreciation.
• Oakwood customers will have access to a broader range of products and services.
• Oakwood employees will become part of a larger organization with more opportunities for growth.
• The combined company will be better positioned to serve its communities.

Next Steps

• Oakwood shareholders will receive a proxy statement/prospectus with details about the merger and the shareholder meeting.
• Oakwood shareholders will need to approve the merger.
• Regulatory approvals will be sought.
• The merger is expected to close in the fourth quarter of 2024.

Key Dates