Southern Community founding director and chairman Dr William G Ward said that the transaction maximizes value for their investors and creates growth opportunities for its employees.
"We are very confident that Capital Bank is the best partner to insure that Southern Community customers will continue to receive the exceptional local service they have long valued," Ward said.
According to the deal, SCMF shareholders may either opt to receive their payment in cash or stock, with total consideration consisting of 40% cash and 60% newly issued shares of CBF, which will be exchanged at a fixed ratio of 0.131 based on a value for CBF of $22 per share, subject to certain adjustments.
SCMF shareholders will also receive non-transferable contingent value rights allowing them to receive up to $1.30 per share in cash five years after the effective date of the transaction based on 75% of the savings to the extent that legacy loan and foreclosed asset losses are less than a prescribed dollar amount.
After the merger, Ward will join Capital Bank Financial as a director and he and vice chairman James Chrysson will join its subsidiary, Capital Bank, as directors.
After the integration of the both banks, Capital Bank will have $8.1bn in assets and 165 branches in North Carolina, South Carolina, Tennessee, Virginia, and Florida.
The transaction is subject to shareholder and regulatory approvals, the registration of CBF’s common stock and other customary closing conditions and is expected to complete in the second quarter of 2012.
Wachtell, Lipton, Rosen & Katz acted as legal advisor for CBF while Stifel, Nicolaus & Co served as financial advisor and Williams Mullen as legal adviser to SCMF.
