The Office of the Comptroller of the Currency (
) has approved
) plan to acquire BankAtlantic, a wholly owned subsidiary of
BankAtlantic Bancorp Inc.
). OCC has given consent based upon the fact that no further
changes will take place in the deal terms.
BB&T-BankAtlantic deal is expected to close by the end of
the second quarter of 2012. Prior to the closure, BankAtlantic must
receive approval from the Federal Reserve. Similarly, BB&T
should also get the necessary consent from the Fed and Federal
Deposit Insurance Corporation (FDIC). BB&T has already received
the permission of the North Carolina Office of the Commissioner of
Earlier, on March 13, when BB&T's deal to acquire
BankAtlantic was opposed in court, BB&T had to modify certain
terms of the agreement. Apart from the earlier deal terms, BB&T
will also assume BankAtlantic Bancorp's obligations related to the
outstanding trust preferred securities (TruPS) having a balance of
about $285 million.
As per the new terms, BB&T will get 95% preferred interest
in a newly established LLC that would consist of a $423 million
pool of loans and $17 million of other net assets as of January 31,
2012. The pool of loans represents a part of those loans, which
were originally anticipated to be retained by BankAtlantic Bancorp
pursuant to the original agreement. However, the acquisition
excludes all legal and other liabilities other than these
outstanding TruPS of BankAtlantic Bancorp.
Additionally, BankAtlantic Bancorp will also provide BB&T
with an incremental $35 million guarantee to further assure the
recovery of $285 million of assumed liability. The LLC assets will
be monetized over time and once BB&T recovers $285 million in
preference amount, the company's interest in the LLC will cease to
Back 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
represents 9.05% of the deposits at BankAtlantic on September 30,
2011, plus the net asset value of the bank. However, deposit
premium could rise or fall, based on the amount of deposits at
BankAtlantic prior to the closing of deal, not exceeding $315.9
However, 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. These investors believe
that the sale infringes 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 TruPS obligations. They accused BankAtlantic Bancorp of
breaching an agreement by stating that the transfer or sale of
majority of its assets will not happen without ensuring that the
acquirer will also assume these TruPS.
The plaintiffs also stated that following the closure of the
transaction, BankAtlantic Bancorp would become a holding company
with no branches and will own a large amount of nonperforming loans
and foreclosed real estate assets. Therefore, the company will no
longer resemble its present operations.
The BB&T-BankAtlantic deal is expected to be highly
advantageous to both the companies. For BankAtlantic, the agreement
will resolve some of its balance sheet and higher operating expense
For BB&T, the transaction will enable it to speed up its
expansion strategy in the Florida region. Also, the deal will add
78 branches to the company's 64-branch network in the Florida
region. Besides substantially increasing the company's market share
and footprints, the acquisition would also improve its top line
over the medium term.
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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