DEFM14A: Renasant to Acquire The First Bancshares in All-Stock Merger Valued at $1.2 Billion
Sentiment:
Merger Announcement
Renasant Corporation and The First Bancshares, Inc. have entered into a definitive agreement for Renasant to acquire FBMS in an all-stock transaction, aiming to expand their banking footprint across the Southeast.
Capital raiseRenasant previously announced offering of 7,187,500 shares of Renasant common stock, which closed on July 31, 2024.
Summary
- Renasant Corporation and The First Bancshares, Inc. have agreed to a merger where FBMS will merge into Renasant, and The First Bank will merge into Renasant Bank.
- FBMS shareholders will receive 1.00 share of Renasant common stock for each share of FBMS common stock they own.
- Renasant expects to issue approximately 31,782,668 shares of Renasant common stock in connection with the merger.
- The implied value of the merger consideration was $35.95 per share of FBMS common stock based on Renasant's closing price on July 29, 2024, and $31.90 based on the closing price on September 12, 2024.
- The mergers are expected to close in the first half of 2025, pending shareholder and regulatory approvals.
- Both the Renasant and FBMS boards of directors unanimously recommend that their respective shareholders vote in favor of the merger agreement.
- Keefe, Bruyette & Woods, Inc. delivered a written opinion to the FBMS board of directors as to the fairness, from a financial point of view, of the exchange ratio in the proposed merger.
- Stephens Inc. delivered a written opinion to the Renasant board of directors as to the fairness, from a financial point of view, to Renasant of the consideration to be given by Renasant in connection with the proposed acquisition of FBMS.
- The merger agreement includes a termination fee of $40 million payable by FBMS to Renasant under certain circumstances.
- The merger is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code.
Sentiment
Score: 7
Explanation: The document presents a balanced view of the merger, highlighting both the potential benefits and risks. The unanimous recommendations from both boards and the fairness opinions from financial advisors contribute to a positive sentiment, although the inherent uncertainties and potential challenges temper the overall outlook.
Positives
- The merger will create a larger, more competitive banking franchise.
- FBMS shareholders will have the opportunity to participate in the future performance of the combined company.
- The combined company is expected to benefit from enhanced products and services, higher lending limits, and greater financial resources.
- The merger is expected to be a tax-free reorganization.
- The FBMS board of directors believes that it was unlikely that other potential acquirors would be able to provide more attractive financial terms.
Negatives
- The market value of the merger consideration will fluctuate with the price of Renasant common stock.
- The integration of the two companies may be more difficult, costly, or time-consuming than expected.
- The combined company expects to incur substantial expenses related to the mergers.
- Holders of Renasant and FBMS common stock will have a reduced ownership and voting interest after the merger.
- The merger agreement contains provisions that may discourage other companies from pursuing a business combination proposal with FBMS.
Risks
- Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated.
- Failure to complete the merger could negatively affect the share prices, future business and financial results of Renasant and FBMS.
- Renasant and FBMS will be subject to business uncertainties and contractual restrictions while the mergers are pending.
- Litigation relating to the merger could result in significant costs, management distraction, and/or a delay of or injunction against the merger.
Future Outlook
The mergers are expected to close in the first half of 2025, subject to shareholder and regulatory approvals.
Management Comments
- Each of the Renasant and the FBMS boards of directors has unanimously adopted the merger agreement and approved the transactions contemplated thereby and unanimously recommends to its shareholders to vote FOR approval of its respective proposals.
Industry Context
The announcement reflects ongoing consolidation trends within the banking industry, where institutions seek to achieve greater scale, efficiency, and market presence.
Comparison to Industry Standards
- The document compares FBMS and Renasant to similar banks in the Southeast region with assets between $5 billion and $20 billion, including Trustmark Corporation, Origin Bancorp, Inc., and WesBanco, Inc.
- The document compares Renasant to similar banks in the Southeast region with assets between $10 billion and $35 billion, including United Bankshares, Inc., WesBanco, Inc., and Simmons First National Corporation.
- The document references 14 selected U.S. bank transactions announced since December 31, 2020, with deal values between $500 million and $2.5 billion and pro forma ownership to shareholders of the acquired company under 40%, including WesBanco, Inc. acquiring Premier Financial Corp. and SouthState Corporation acquiring Independent Bank Group, Inc.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Renasant Board of Directors Member | NA | M. Ray (Hoppy) Cole, Jr. | Upon completion of the merger | As per the merger agreement, the President, Chief Executive Officer and Chairman of FBMS will be appointed to the Renasant board. |
| Renasant Board of Directors Member | NA | Three independent directors of FBMS | Upon completion of the merger | As per the merger agreement, three independent directors of FBMS will be appointed to the Renasant board. |
| Renasant Bank Board of Directors Member | NA | M. Ray (Hoppy) Cole, Jr. | Upon completion of the merger | As per the merger agreement, the President, Chief Executive Officer and Chairman of FBMS will be appointed to the Renasant Bank board. |
| Renasant Bank Board of Directors Member | NA | Three independent directors of FBMS | Upon completion of the merger | As per the merger agreement, three independent directors of FBMS will be appointed to the Renasant Bank board. |
| Renasant Bank Board of Directors Member | NA | Two additional independent directors of The First Bank | Upon completion of the merger | As per the merger agreement, two additional independent directors of The First Bank will be appointed to the Renasant Bank board. |
Stakeholder Impact
- FBMS shareholders will receive Renasant common stock, providing them with a stake in a larger, more diversified company.
- Customers of both banks are expected to benefit from an expanded range of products and services.
- Employees of both banks may experience uncertainty regarding their future roles and responsibilities.
Next Steps
- Renasant and FBMS will hold special meetings of their respective shareholders to vote on the merger agreement.
- The companies will seek regulatory approvals from the Federal Reserve, FDIC, and Mississippi Department of Banking and Consumer Finance.
- The companies will work towards completing the mergers in the first half of 2025.
Key Dates
| Date | Description |
|---|---|
| January 30, 2020 | Renasant and FBMS entered into a mutual confidentiality agreement. |
| February 18, 2020 | Renasant submitted a non-binding indication of interest to FBMS. |
| March 9, 2020 | FBMS board of directors elected to suspend further discussions due to uncertainty about the emerging impact of the coronavirus. |
| May 7, 2021 | C. Mitchell Waycaster re-engaged with M. Ray Cole, Jr. about a potential transaction between Renasant and FBMS. |
| May 12, 2021 | Renasant and FBMS entered into a new mutual confidentiality agreement. |
| June 2021 | Renasant and FBMS agreed to discontinue further discussions about a transaction. |
| January 18, 2024 | Representatives of KBW called Mr. Cole to gauge FBMSs interest in a transaction with Renasant. |
| February 6, 2024 | Meeting among Mr. Cole, Mr. Waycaster, E. Robinson McGraw, and Kevin D. Chapman in Hattiesburg, Mississippi. |
| February 8, 2024 | Mr. Waycaster verbally communicated to KBW that, subject to due diligence, Renasant was prepared to offer to acquire FBMS in an all-stock transaction with a 1.00 exchange ratio. |
| February 9, 2024 | The oversight committee met with representatives of KBW to review Renasants verbal offer. |
| February 29, 2024 | Renasant submitted a non-binding indication of interest letter to FBMS through KBW. |
| March 5, 2024 | The FBMS board of directors held a meeting attended by representatives of KBW, who reviewed financial matters relating to the proposed transaction with the FBMS board of directors. |
| March 7, 2024 | FBMS and Renasant signed a Mutual Confidentiality and Non-Disclosure Agreement. |
| March 2024 | Renasant met with its federal and state regulators to preview the potential acquisition. |
| March 29, 2024 | The oversight committee of the FBMS board of directors held a meeting to discuss the status of the proposed acquisition and Renasants due diligence investigation of FBMS. |
| April 10, 2024 | The Renasant board of directors held a meeting to discuss the status of the potential acquisition with FBMS. |
| April 16, 2024 | Covington & Burling provided an initial draft of a proposed merger agreement to Alston & Bird. |
| April 18, 2024 | The FBMS board of directors held a meeting attended by Mr. Waycaster and Mr. Chapman, who provided an update on Renasants progress toward completing its confirmatory due diligence and reiterated Renasants commitment to pursuing the proposed transaction. |
| April 21, 2024 | The Renasant board of directors met with Renasant executive management to discuss, among other matters, an update on the potential acquisition of FBMS. |
| May 10, 2024 | Alston & Bird provided an initial set of comments to the draft merger agreement provided by Covington & Burling. |
| May 31, 2024 | The FBMS board of directors held a meeting to discuss the progress of the transaction and review the then-current drafts of the transaction agreements. |
| June 2, 2024 | The Renasant board of directors held a meeting to discuss the potential acquisition of FBMS. |
| June 5, 2024 | Representatives of Renasant notified FBMS that Renasant would like to pause discussions with FBMS to focus on addressing its regulators expectations. |
| July 12, 2024 | Mr. Waycaster contacted Mr. Cole and indicated that Renasant was prepared to re-engage in discussions regarding the potential transaction and wanted to move expeditiously toward executing the merger agreement. |
| July 18, 2024 | Mr. Waycaster and Mr. Chapman attended a regularly scheduled meeting of the FBMS board of directors, at which Mr. Waycaster and Mr. Chapman reiterated Renasants interest in moving forward on the potential acquisition on the same terms set forth in the letter of intent. |
| July 25, 2024 | The FBMS board of directors held a meeting to consider the approval of the merger agreement and the transactions contemplated by the merger agreement. |
| July 25, 2024 | The Renasant board of directors also held a meeting to discuss the status of the draft merger agreement and the transactions contemplated by the merger agreement. |
| July 29, 2024 | The FBMS board of directors met again virtually. |
| July 29, 2024 | The Renasant board of directors met again to discuss the potential acquisition with FBMS. |
| July 29, 2024 | FBMS and Renasant executed the merger agreement. |
| July 29, 2024 | Renasant and FBMS issued a joint press release announcing the execution of the merger agreement. |
| October 15, 2024 | Deadline to request documents to receive them before the Renasant special meeting or the FBMS special meeting. |
| October 22, 2024 | Date of the Renasant special meeting at 1:30 p.m., Central Time. |
| October 22, 2024 | Date of the FBMS special meeting at 2:00 p.m., Central Time. |
| First Half 2025 | Expected completion of the mergers. |
| June 5, 2025 | Potential termination date of the merger agreement. |
| September 5, 2025 | Extended potential termination date of the merger agreement if only regulatory approvals are outstanding. |
Keywords
merger agreement, acquisition, Renasant, FBMS, banking, shareholders, regulatory approvals, merger
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