BOK Financial Gets Regulatory Consent for CoBiz Acquisition

BOK Financial Corporation BOKF recently announced that it has received all required regulatory approvals to complete the acquisition of Denver-based CoBiz Financial Inc. COBZ announced in June 2018.

The deal is still subject to approval from shareholders of to-be-acquired company, who will vote at a special meeting of shareholders on Sep 27. The buyout is expected to be closed in the last quarter of 2018.

Details of the Deal

The stock-cash deal worth about $1 billion is in sync with BOK Financial’s expansion strategy.

Per the terms of the transaction, CoBiz shareholders will be receiving shares at an exchange ratio of 0.17 shares of BOK Financial common stock for each CoBiz share and $5.70 in cash for per CoBiz share. Notably, common shareholders of CoBiz will be entitled to receive $977 million of total deal value based on the closing price of BOK Financial on Jun 15, 2018.

Also, cash or stock option is subject to the overall value of the deal, which is 75% in stock and 25% in cash. Moreover, Chairman and CEO Steve Bangert of CoBiz will be part of BOK Financial’s board of director, post-merger.

Per an article by Denver Business Journal, if the deal does not proceed as plan and gets terminated, CoBiz will be required to pay a termination fees of $34.2 million to BOK Financial to compensate for the money and other resources spent so far.

Also, five of the senior executives, including CEO Steven Bangert, are entitled to more than $9.7 million in cash, equity and benefits among them as severance payments in case they are offered no role after BOK Financial acquires CoBiz.

Benefits to be Derived

On completion, BOK Financial expects this acquisition to be accretive to earnings per share by 6% in 2019 and 9% in 2020. Also, all the synergies are likely to be achieved in 2019. Notably, the deal is expected to deliver an internal rate of return of more than 20%.

Other Banks That Received Regulatory Nod for Acquisitions

In August 2018, some more banks remained successful in getting the required regulatory approvals to move on with their announced buyouts.

First Midwest Bancorp FMBI received the Federal Reserve’s approval for the acquisition of Northern States Financial Corporation and its wholly owned subsidiary, NorStates Bank. The acquisition was announced on Jun 7 and is expected to be completed by fourth-quarter 2018. Based on First Midwest’s closing price as of Jun 5, 2018, the deal value is $91.0 million.

Further, Itau Unibanco Holding S.A. ITUB announced that it has received consent from the Central Bank of Brazil to execute investment in XP Investimentos S.A., which was announced in May 2017. In March 2018, the Administrative Council for Economic Defense gave its approval to the buyout. The deal is expected to be completed by August 2018.

Our Take

Bok Financial’s expansion into carefully selected markets bode well for the long term and is indicative of its strong financial position. The company has witnessed decent organic growth over the last few years and is well poised to benefit from the improving economic backdrop.

However, consistently increasing expenses and unsustainability of capital deployment activities remain near-term headwinds for the company.

The stock has gained 10% so far this year, outperforming the industry’s rally of nearly 1%.

BOK Financial currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Itau Unibanco Holding S.A. (ITUB) : Free Stock Analysis Report
 
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CoBiz Financial Inc. (COBZ) : Free Stock Analysis Report
 
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