DEFA14A: Sterling Bancorp Amends Proxy Statement Following Shareholder Demand Letters Regarding EverBank Acquisition

Sterling Bancorp has voluntarily supplemented its definitive proxy statement regarding the acquisition by EverBank following demand letters from purported shareholders alleging disclosure deficiencies.

Summary

• Sterling Bancorp is being acquired by EverBank Financial Corp for $261 million.
• Following the announcement, Sterling received demand letters from purported shareholders alleging disclosure deficiencies in the preliminary and definitive proxy statements.
• To address these concerns and avoid potential litigation, Sterling has voluntarily provided supplemental disclosures.
• The supplemental disclosures include additional details about the background of the transaction, the opinions of the company's financial advisors, and the interests of certain directors and executive officers.
• The company maintains that the original disclosures were compliant with all applicable laws and denies the allegations in the demand letters.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the shareholder demand letters and the need for supplemental disclosures, which suggest potential issues with the initial transaction process. The implied valuations being lower than the purchase price also contribute to the negative sentiment.

Positives

• The company is taking proactive steps to address shareholder concerns by providing supplemental disclosures.
• The company is proceeding with the acquisition by EverBank, which will provide a fixed purchase price of $261 million.
• The supplemental disclosures provide additional transparency regarding the transaction process and financial analysis.

Negatives

• The company received demand letters from purported shareholders alleging disclosure deficiencies, indicating potential dissatisfaction with the initial proxy statements.
• The need for supplemental disclosures suggests that the initial disclosures may have been inadequate or unclear.
• The implied equity values from the dividend discount model and discounted cash flow model are lower than the agreed purchase price of $261 million.

Risks

• There is a risk of additional or similar complaints or demand letters being received by the company.
• The company may face potential legal expenses and disruptions due to the shareholder litigation.
• The company's forward-looking statements are subject to various risks and uncertainties that could affect future results.

Future Outlook

The company's future performance is subject to various risks and uncertainties, and actual results may differ materially from forward-looking statements. The company disclaims any obligation to update forward-looking statements.

Management Comments

• The Company believes that the disclosures set forth in the Preliminary Proxy Statement and the Definitive Proxy Statement comply fully with all applicable law and denies the allegations in the Demand Letters.
• Nothing in the Supplemental Disclosures shall be deemed an admission of the legal merit, necessity or materiality under applicable laws of any of the disclosures set forth herein.
• The Company specifically denies all allegations that any additional disclosure was or is required or material.

Industry Context

The document highlights the ongoing consolidation in the banking industry, with Sterling Bancorp being acquired by EverBank. The supplemental disclosures provide insights into the valuation process and the strategic alternatives considered by the company, which are relevant to the broader M&A activity in the sector.

Comparison to Industry Standards

• The document provides a detailed analysis of comparable companies and transactions, including multiples of stock price to tangible book value, stock price to LTM EPS, transaction price to tangible book value, core deposit premiums, and one-day market premiums.
• The selected companies analysis includes companies such as First Northwest Bancorp, Ames National Corporation, Finward Bancorp, and First Western Financial, Inc.
• The selected transactions analysis includes transactions such as FirstSun Capital Bancorp / HomeStreet, Inc., German American Bancorp, Inc. / Heartland BancCorp, and Burke & Herbert Financial Services Corp. / Summit Financial Group, Inc.
• The multiples and premiums observed in these comparable companies and transactions provide a benchmark for assessing the fairness of the acquisition price for Sterling Bancorp.

Legal Proceedings

• The company has received demand letters from purported shareholders alleging disclosure deficiencies in the proxy statements.
• The company may face additional or similar complaints or demand letters in the future.

Stakeholder Impact

• Shareholders will vote on the proposed acquisition by EverBank.
• The acquisition will result in the dissolution of Sterling Bancorp as a separate entity.
• Employees may be affected by the merger of Sterling Bank and Trust into EverBank, National Association.
• The company's customers will become customers of EverBank, National Association.

Next Steps

• The special meeting of shareholders will be held virtually on December 8, 2024, to vote on the transaction.
• The company will continue to address any additional shareholder concerns or potential litigation.
• The transaction is expected to close following shareholder approval and regulatory clearances.

Key Dates

Keywords

acquisition, merger, proxy statement, shareholder litigation, disclosure, banking, financial advisors, EverBank, Sterling Bancorp, stock purchase agreement