Tracing Path to Big Buys by Simmons Bank

by George Waldon  on Monday, Dec. 4, 2017 12:00 am   2 min read

In October, Simmons First National Corp. of Pine Bluff closed two of its biggest deals yet on the acquisition trail: $2.6 billion-asset Southwest Bancorp Inc. of Stillwater, Oklahoma, and $2.5 billion-asset First Texas BHC Inc. of Fort Worth, Texas.

Let’s take a look at some highlights along the path traveled by Simmons to bring the deals home and grow the bank holding company into a $14 billion-asset concern. Details are courtesy of securities filings.

The Southwest Bancorp transaction, which carried the Simmons footprint into Oklahoma, Texas and Colorado and expanded its Kansas franchise, started with a meeting of the CEOs on June 23, 2016.

Southwest’s Mark Funke came to Little Rock and brought up the possibility of a merger during a visit with George Makris and other Simmons executives.

The conversation between top execs at Southwest and Simmons continued over breakfast in New York during an investor conference on Aug. 1.

On Sept. 15, talks got down to brass tacks with discussion of pricing and terms.

A request by the Southwest Bancorp board of directors for a revised, higher bid led to the winning offer by Simmons on Sept. 23: $95 million cash and 7.25 million shares of stock.

Simmons’ combination of cash andstock representeda $457.4 milliontransaction at the time.

By Dec. 13, the value of the deal had ballooned to $564.4 million as the stock price of Simmons surged to $64.74 per share. That boosted the multiples of the deal to 1.99 times book, 2.11 times tangible book value and 25.2 times estimated earnings for 2017.

Little Rock’s Stephens Inc. worked with Simmons to help make the Southwest Bancorp deal happen. The acquisition is the largest for Simmons so far.

Stephens worked the other side ofthe fence in the First Texas transaction, helping the Fort Worth bankers find potential merger partners.

Stephens served as the financial adviser to First Texas to explore merger opportunities, an effort that gained momentum in 2015. However, Simmons didn’t enter the picture until 2016.

Talks with two unidentified companies in 2015 produced a high stock swap offer for First Texas valued at $353.1 million.

Concerns by First Texas regarding the direction of the combined organization led to a withdrawal of the $353.1 million letter of intent deal on Aug. 4, 2015.

By the summer of 2016, Simmons was among 10 suitors that Stephens had lined up for First Texas. After preliminary due diligence, Simmons emerged with a nonbinding letter of intent to acquire First Texas for $60 million cash and 6.5 million shares.

That Oct. 14 offer carried a valuation of $385 million at the time.

In response to a rival stock swap bid of $400 million, Simmons sweetened the cash portion of its offer to $70 million on Oct. 26.

The floating value of Simmons stock supported by the guaranteed cash won the day over the fixed stock-only bid of $400 million by an unidentified bidder.

An Oct. 31 letter of intent between First Texas and Simmons led to deeper due diligence and a contractual window of three months to negotiate the terms for a definitive agrement.

A done deal was announced by Simmons and First Texas on Jan. 23.

Stephens pegged the multiples of the transaction at 2.04 times book value, 2.44 times tangible book value and 21 times estimated 2017 earnings based on Simmons’ closing price of $60.30 per share on Jan. 20.

Heading West

Simmons picked up 46 new bank locations with recent acquisitions of Southwest Bancorp (Bank SNB) and First Texas BHC (Southwest Bank).

 

 

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