Recently, merger of BOK Financial Corporation BOKF and Denver-based CoBiz Financial Inc. COBZ , announced in June 2018, received approval of shareholders of the latter. However, most of the shareholders voted against the "golden parachute" compensation to be paid to top five executives of CoBiz Financial, post merger, per the SEC filing.
Notably, five of the senior executives, including CEO Steven Bangert, were 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.
The buyout is expected to close on Oct 1. Notably, last month, this stock-cash deal received all required regulatory approvals to complete the acquisition. Terms of the Deal
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 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.
Cash or stock option is subject to the overall value of the deal, which is 75% in stock and 25% in cash. Post merger, chairman and CEO Steve Bangert of CoBiz will be part of BOK Financial's board of directors.
CoBiz has total assets of about $3.9 billion, with a strong momentum of earnings and revenues, since 1994. With a robust presence in Colorado and Arizona, CoBiz is a commercial bank focused on specialty lending lines of business. Such business includes healthcare and public finance, along with fee-generating businesses, such as wealth management and commercial insurance.
"The CoBiz acquisition is an important milestone for our company, and we look forward to welcoming CoBiz employees and customers to the BOK Financial family," said Steven G. Bradshaw, president and chief executive officer of BOK Financial. "Over the past several months as we've prepared for closing, we've been highly impressed by the entire CoBiz team, their can-do attitude, and their enthusiasm about becoming a part of BOK Financial. Now, we can collectively move forward to deliver on the promise of this acquisition," he further noted. After-Effects of the Deal
Pre-tax merger and integration costs are anticipated to approximate around $44 million for BOK Financial, with around 50% to be recorded in 2018 and the balance in 2019. Further, annual cost savings of around 40% of CoBiz's non-interest expense will likely be recorded.
Per BOK Financial's expectations, the deal is likely to be 6% accretive to earnings in 2019 and 9% in 2020. Notably, the year 2020 will be the first full year with synergies. Furthermore, the company expects an IRR of more than 20% from this merger agreement.
Notably, conversion of banking operations and other formalities will likely complete in the first quarter of 2019. Therefore, post conversion, all banking procedures will be operated under the BOK Financial brand in both Colorado and Arizona. Conclusion
Over the past several years, BOK Financial has transformed from merely being a bank in Oklahoma to a chief financial service provider. The company has continued its expansion into carefully selected markets in neighboring states. Currently, economic growth in Colorado is favorable for business expansion which is likely to benefit the bank.
We remain encouraged by such expansion moves of BOK Financial and believe its strong capital position will induce the company to undertake further strategic acquisitions.
BOK Financial currently carries a Zacks Rank #2 (Buy). Shares of the company have gained 7.7% year to date, outperforming the industry
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Huntington Bancshares Incorporated (HBAN): Free Stock Analysis Report BOK Financial Corporation (BOKF): Free Stock Analysis Report First Financial Bankshares, Inc. (FFIN): Free Stock Analysis Report CoBiz Financial Inc. (COBZ): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research