Cadence Bank will become a privately-held financial institution still headquartered in Starkville with jobs intact and more hiring possible, officials said in a press conference this afternoon.
Cadence board members entered into the deal with Community Bankcorp (known as CBC) late Tuesday afternoon, Cadence CEO Lewis F. Mallory Jr. said at the press conference.
Under the agreement, CBC would acquire Cadence, which will be a wholly-owned subsidiary, keep its charter and be the surviving bank under a two-bank merger with CBC, Mallory said.
"Cadence's board feels that it was acting, of course, in accordance with the fiduciary responsibility that it has ... ," he said. "It had gone through an exhaustive ... and extensive evaluation of this transaction and obviously concluded that this transaction was in Cadence's best interest."
There were at least three fundamental reasons for the change, he said.
â€˘ Price. The cash offer from CBC was a premium to the previous price and would not be dependent on market fluctuations.
â€˘ Jobs. Employment will be preserved through this transaction. "Prospects are quite high ... that those jobs would multiply, not be diminished," Mallory said.
â€˘ Name. Cadence will keep its name and the bank will operate under its charter.
"Cadence is the beneficiary of a huge capital injection," he said. "It will come in significant supply with this transaction."
The bank will be privately-owned and will no longer be publicly-traded, he said.
"We remain Cadence. Same people. Same bank. Same charter," Mallory said.
In deferring comment on how the deal developed, officials said a proxy statement forthcoming in the next few weeks will address such questions as the transaction's timeline.
Cadence officials have paid Trustmark a $2 million termination fee to end its previous deal with the Jackson-based institution, which called for a merger of the two Mississippi banks with Trustmark as the surviving entity.
Officials with Trustmark Bank say have have received the fee and notification that Cadence is ending the September deal to merge the two Mississippi banking businesses.
Trustmark's CEO â€“ Richard G. Hickson â€“ expressed disappointment with the new proposed transaction.
â€śTrustmark is a highly profitable and extremely well-capitalized financial services organization with significant optionality relative to both strategic and financial acquisitions. While we are disappointed with the decision of Cadence, we are determined to remain disciplined in our approach to acquisitions. Trustmark will continue to evaluate opportunities that meet our strategic and financial acquisition objectives and are beneficial to our shareholders," Hickson said in a statement issued after news of the CBC-Cadence deal emerged.
The statement issued by CBC and Cadence this morning does not indicate the overall value of the new deal, but it offers Cadence shareholders $2.50 cash per common share of the bank. The agreement with Trustmark provided Cadence common shareholders $2 a share.
CBC has offered $38 million to buy the $44 million in preferred Cadence stock the U.S. Treasury owns. Trustmark previously made an offer of $30.05 million.
â€śI am pleased to announce this transaction with CBC will deliver more value to our shareholders,â€ť Cadence Chairman and CEO Lewis F. Mallory Jr. said in the statement announcing the proposal.
â€śThe cash price per share represents a premium to our current trading price and represents a higher, more certain price than what had been previously offered. We are excited about the opportunity to join with CBC to continue our operations under the Cadence Bank name and the Cadence charter while continuing to serve our communities with our existing employee team.â€ť
"Cadence has a talented management team, highly-dedicated employees and a loyal customer base. We believe we can support Cadence with expanded access to capital to fund Cadenceâ€™s future growth including loans to local businesses and individuals," said Paul B. Murphy Jr., CEO and president of CBC. "We are also excited about the potential of expanding Cadenceâ€™s involvement in existing communities and developing new markets. As CBC fully deploys the capital we have raised, we expect to use the Cadence platform as the backbone for our operations as we grow regionally using the Cadence name, providing for future employment and economic growth in the region. We believe this transaction is a win-win situation for Cadenceâ€™s shareholders, employees and customers, as well as the members of its local communities.â€ť
This latest transaction is subject to meeting or the waiver of standard closing expectations, officials said in the statement, and expected to close by the first quarter of 2011.
Cadence's stock ended the trading day at $2.54 a share, up 46 cents, or 22.12 percent.
Editor's note: The Starkville Daily News will develop a detailed story on this transaction posted to the website and published in the newspaper Thursday.