FirstSun Capital Bancorp, the holding company of Sunflower Bank, and HomeStreet, the holding company of HomeStreet Bank, have signed a definitive merger agreement.
Under the terms of the agreement, HomeStreet and HomeStreet Bank will merge with and into FirstSun and Sunflower Bank, respectively.
HomeStreet shareholders are expected to receive 0.4345 shares of FirstSun common stock, for each share of HomeStreet common stock held, which represents a price of $14.75 per share.
HomeStreet Bank will continue to operate under its tradename in the current markets.
The merger will create a premier regional bank with $17bn in total assets, operating through 129 branch locations across the US markets and will be listed on the NASDAQ.
The transaction, which has been unanimously approved by the board of directors of both companies, is expected to be completed in the middle of 2024.
The closing is subject to certain customary closing conditions, including receipt of regulatory approvals and approval by the shareholders of both companies.
As part of the merger, FirstSun executive chairman Mollie Hale Carter and FirstSun CEO, president and director Neal Arnold will continue in their current roles at the combined company.
HomeStreet executive chairman, president and CEO Mark Mason will be appointed as the combined company’s executive vice chairman.
In addition, three current HomeStreet directors, including Mr. Mason, will join the board of directors of the combined company, at closing.
FirstSun and Sunflower executive chairman Mollie Hale Carter said: “We are very confident that this merger will enhance our ability to deliver stronger and more sustainable growth with greater earnings power and shareholder value creation to our combined shareholders.
“Each entity brings a presence in large, dynamic markets that are ripe for future organic growth. The combination of FirstSun and HomeStreet creates a premier midcap bank in the nation’s best markets and an opportunity to deploy FirstSun’s proven playbook of C&I-focused growth.
“FirstSun is excited about the strategic synergies of this merger and the opportunities created to deliver strong sustainable growth and superior shareholder value creation.
“The HomeStreet team brings additional talent to enhance our speciality business line capabilities across this expanded footprint.”
In addition to the merger, FirstSun has signed agreements with investors led by Wellington Management, to raise $175m in capital financing to support the transaction.
The company will use the proceeds from the capital raise to support the balance sheet.
The equity capital raising is expected to close simultaneously with the merger, subject to the concurrent closing of the merger and other closing conditions.
Upon closing, HomeStreet shareholders will have 22% of the outstanding shares and FirstSun common shareholders will have 64% shares of the combined company.
The remaining shares, representing 14% of the combined company, will be issued to investors in exchange for capital financing.
Stephens served as financial advisor and rendered a fairness opinion to FirstSun’s board of directors, and Nelson Mullins Riley & Scarborough served as legal counsel to FirstSun.
Keefe Bruyette and Woods, A Stifel Company, served as financial advisor and rendered a fairness opinion to HomeStreet’s board of directors, and Sullivan and Cromwell served as legal counsel to HomeStreet.
Schulte, Roth & Zabel served as legal advisor to Wellington Management, while Latham & Watkins served as legal advisor to Keefe Bruyette and Woods, A Stifel Company.
HomeStreet chairman, CEO and president Mark Mason said: “This merger validates the intrinsic value of HomeStreet’s loyal customer base, strong management and dynamic markets in which we operate and allows our shareholders to participate in the benefits of the combination going forward.
“The combined company will have an attractive and comprehensive product suite and market footprint as well as a more diversified loan portfolio and increased lending capabilities across asset classes, geographies and industry verticals.
“We believe this merger will also improve our customers’ experience and create new opportunities for our employees enabling us to retain and attract top talent.”
