) deal to acquire BankAtlantic, a wholly owned subsidiary of
BankAtlantic Bancorp Inc.
) has been floored again with fresh charges made by J. Phillip Max,
the envoy of the shareholders.
As reported by
, a complaint was filed in the Broward County Circuit Court in
Florida against BankAtlantic Bancorp along with its directors,
Chairman and CEO. Moreover, the case was also against BB&T as
BFC Financial Corp
), the principal owner of BankAtlantic Bancorp.
The lawsuit claims that the shares of BankAtlantic have been
underpriced in the acquisition deal. Further, it alleges that the
executives have been unfairly granted an amount of about $11
million in the form of non-compete and severance awards.
Moreover, Alan B. Levan, CEO of BankAtlantic Bancorp, along with
fellow executives has been accused of indulging in personal
benefits at the expense of the shareholders by agreeing to receive
personal compensation from the purchase price, which rightfully
belongs to the shareholders.
The lawsuit has been filed with the intention to rescind the
agreement and to reinstate damages to shareholders. According to
the allegation, the accused individuals violated their duties by
allowing the sale for minimal consideration, which significantly
hurt the shareholders' interests.
Further, the lawsuit stated that the expected shareholder equity
after the revised deal would be $146.5 million. This is
considerably less than $301 million, the expected amount after the
original agreement. The reduced compensation is insufficient for
The Original Deal
In November 2011, BB&T had announced its plan to acquire
BankAtlantic. Under the terms of the deal, the company would
acquire $2.1 billion in loans and $3.3 billion in deposits (90%
core and low-cost funds) for $301 million premium. This represented
9.05% of the deposits at BankAtlantic on September 30, 2011, plus
the net asset value of the bank.
However, deposit premiums could rise or fall, based on the
amount of deposits at BankAtlantic prior to the closing of the
deal, not exceeding $315.9 million.
The First Protest
Immediately after the deal was announced, a group of corporate
debt investors of BankAtlantic, led by Hildene Capital Management
and Alesco Preferred Funding, filed a lawsuit against the firm to
prevent it from selling its loans, deposits and branches to
BB&T as the sale breached the terms of their creditors'
The plaintiffs accused both BB&T and BankAtlantic of
structuring the transaction in such a way that the acquirer can
evade the trust preferred securities (TruPS) obligations.
The Revised Terms
The opposition led to the modification of certain terms of the
agreement by BB&T in March 2012. As per the modified deal,
along with the earlier terms, BB&T will also assume
BankAtlantic Bancorp's obligations related to the outstanding TruPS
having a balance of about $285 million.
Additionally, BB&T will get 95% preferred interest in a
newly established LLC, which would consist of a $423 million pool
of loans and $17 million of other net assets as of January 31,
2012. BankAtlantic Bancorp will also provide BB&T with an
incremental $35 million guarantee to further assure the recovery of
$285 million of assumed liability.
Status of the Deal at Present
On April 10, the Office of the Comptroller of the Currency (
) approved the acquisition deal based upon the fact that there will
be no further changes in the deal terms. The BB&T-BankAtlantic
deal is expected to close by the end of this quarter.
For BankAtlantic, the agreement will resolve some of its balance
sheet and higher operating expense related problems. For BB&T,
the transaction will enable it to speed up its expansion strategy
in the Florida region by the addition of 78 branches and will
increase its market share and footprints.
Though the BB&T-BankAtlantic deal is expected to be
substantially beneficial for both the companies, the repeated
emergence of oppositions and lawsuits by the investors may mar the
successful completion of the acquisition deal as the approval of
the Federal Reserve and Federal Deposit Insurance Corporation
(FDIC) is still pending.
Currently, the shares of BB&T retain a Zacks #2 Rank, which
translates into a short-term Buy rating.
BB&T CORP (
): Free Stock Analysis Report
BANKATLANTIC -A (
): Free Stock Analysis Report
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