DEFA14A: Territorial Bancorp Board Rejects Unsolicited Acquisition Proposal, Recommends Shareholders Approve Hope Bancorp Merger

Territorial Bancorp's board of directors has rejected an unsolicited acquisition proposal from an unidentified investor group and continues to recommend that stockholders vote in favor of the proposed merger with Hope Bancorp.

Summary

• This document is a supplement to the proxy statement/prospectus regarding the proposed merger between Hope Bancorp, Inc. and Territorial Bancorp Inc.
• The supplement addresses an unsolicited acquisition proposal (the Landon Conditional Proposal) from an unidentified investor group seeking to acquire control of at least 70% of Territorial's common stock at $12.00 per share.
• The Territorial Board of Directors has reviewed the Landon Conditional Proposal and determined that it is not a Superior Proposal and is not reasonably likely to lead to a Superior Proposal.
• The Board believes pursuing the Landon Conditional Proposal would violate the Merger Agreement and jeopardize the Hope Merger.
• The Board cites several reasons for its determination, including the conditional nature of the Landon Conditional Proposal, the lack of committed financing, regulatory approval uncertainties, and the potential for illiquidity for non-tendering shareholders.
• The Board reiterates its unanimous recommendation that Territorial stockholders vote FOR the merger proposal with Hope Bancorp, the compensation proposal, and the adjournment proposal at the special meeting on October 10, 2024.
• The Board believes the Hope Merger represents a strategic merger transaction, which involves a business combination and the continued participation of all Territorial stockholders in the combined entity as compared to the Landon Conditional Proposal, which is a cash-out transaction whereby at least 70% of Territorial stockholders will cease to have any future participation in the combined entity and will be deprived of the opportunity to participate in the earnings and growth of the combined company.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the board is acting in what it believes is the best interest of shareholders, the rejection of a potentially higher-value offer and the uncertainty surrounding the merger create some concern.

Positives

• The Board has carefully considered an alternative proposal, demonstrating due diligence to shareholders.
• The Board clearly outlines the reasons for rejecting the alternative proposal, providing transparency to shareholders.
• The Board reaffirms its commitment to the Hope Bancorp merger, providing clarity on its strategic direction.

Negatives

• The rejection of the Landon Conditional Proposal means shareholders will not have the opportunity to consider a $12.00 per share cash offer.
• The Landon Conditional Proposal highlights potential dissatisfaction among some investors with the Hope Bancorp merger.
• The ongoing uncertainty surrounding the merger could create anxiety for shareholders.

Risks

• The Hope Merger is still subject to regulatory approvals and shareholder vote, which could be delayed or rejected.
• The potential for litigation or other challenges to the merger could arise.
• The failure to complete the merger could negatively impact Territorial's stock price and future prospects.
• The Landon Conditional Proposal could be revised and resubmitted, potentially creating further uncertainty.

Future Outlook

The Board of Directors continues to unanimously recommend that Territorial stockholders vote FOR the merger proposal with Hope Bancorp, the compensation proposal, and the adjournment proposal.

Management Comments

• The Board determined that the Landon Conditional Proposal is neither a Superior Proposal under the standards of the Merger Agreement nor is it reasonably likely to lead to a Superior Proposal.
• The Board further determined that the Landon Conditional Proposal is materially flawed such that the Board cannot pursue the Landon Conditional Proposal without violating the Merger Agreement and jeopardizing the Hope Merger.

Industry Context

The document highlights the ongoing consolidation trend in the banking industry, with Hope Bancorp seeking to acquire Territorial Bancorp.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards.
• However, the discussion of 'Superior Proposal' aligns with standard M&A practices where boards must consider alternative offers that provide greater value to shareholders.
• The $3 million termination fee is a common feature in merger agreements to compensate the other party for time and expenses if the deal falls through.

Stakeholder Impact

• Shareholders will be impacted by the outcome of the merger vote and the potential for future growth and dividends of the combined company.
• Employees of Territorial Bancorp may be affected by potential job losses or changes in roles following the merger.
• Customers of both banks could experience changes in services and products offered.

Next Steps

• Territorial stockholders will vote on the proposed merger with Hope Bancorp at the special meeting on October 10, 2024.
• Regulatory approvals for the Hope Merger are still pending.
• The Landon Conditional Proposal could be revised and resubmitted.

Key Dates

Keywords

Merger, Territorial Bancorp, Hope Bancorp, Acquisition, Proxy Statement, Landon Conditional Proposal, Superior Proposal, Shareholders, Board of Directors