Wall Street was unhappy with last week’s agreement by Ameris Bancorp to buy Fidelity Southern Corp., but analysts who follow Ameris like the deal.
While Ameris’ stock fell to a 52-week low after the announcement, three analysts raised their ratings on the bank last week.
“We think Ameris’ shares underperformed following the deal announcement not because of poor deal metrics (to us they are fair to solid), but because investors are concerned that if things are getting incrementally concerning for a potential slowdown that could devolve into a recession, buying another bank’s loan portfolio looks like an inappropriate decision,” Piper Jaffray analyst Brett Rabatin said in a research note.
Ameris fell by $2.84 to $31.18 on Dec. 17 after the merger announcement and with the overall market slumping, it dropped to a low of $30 this week.
Rabatin, who raised his rating on Ameris from “neutral” to “overweight,” asked if investors don’t want to buy the stock now with the price depressed, when would they?
“Time will tell on the economy, but at some point franchise value and relative valuation metrics matter. Fast forwarding a year from now, picking up shares of Ameris at present levels should have solid reward metrics,” he said.
Ameris agreed to buy Atlanta-based Fidelity Southern, parent of Fidelity Bank, for stock valued at $751 million at the time the deal was announced. But after the decline in Ameris’ stock price, the value of the deal dropped to about $662 million when the stock bottomed out on Wednesday.
The two banks combined have 191 offices in Florida, Georgia, Alabama and South Carolina. That includes 26 branches in the Jacksonville market and 72 in the Atlanta area.
Ameris plans to maintain its executive offices in Jacksonville after the merger but will move the charter of its bank subsidiary from Moultrie, Georgia, to Atlanta, which will become its largest market.
“Acquisition of Fidelity Southern is superb addition of low-cost, highly core deposits with deep and irreplaceable footprint in the Atlanta, Georgia, MSA,” FIG Partners analyst Christopher Marinac said in a research note as he raised his rating on Ameris from “market perform” to “outperform.”
“New Fidelity customers add excellent opportunities,” he said.
Stephens analyst Tyler Stafford, who maintained his “overweight” rating on Ameris, said many investors were not expecting to see a buyout of Fidelity Southern.
“Our view, however, was that Fidelity Southern was indeed a potential seller given the CEO’s age and recent changes to proxy verbiage and that there was tremendous scarcity value in the franchise,” he said.
James Miller, CEO of Fidelity Southern since 1979, was 77 when the company filed its annual proxy statement in the spring. He will become executive chairman of Ameris after the merger, which is expected to be completed in the second quarter of 2019.
One other analyst, Casey Whitman of Sandler O’Neil, raised her rating on Ameris last week from “hold” to “buy.” eek. Whitman did not respond to a request for her upgrade note.
After affiliates of Siris Capital Group LLC completed their $2 billion buyout of Web.com Group Inc. in October, the Jacksonville-based provider of website development and marketing services for businesses said there would be no changes to operations.
However, two months later, Web.com founder David Brown announced he is retiring as CEO.
Brown has served as CEO since he started the company in 1997. He will stay on until a new chief executive is brought in, which is expected in the first quarter of 2019.
Web.com is continuing with its plans, started before the buyout agreement was reached in June, to move into a new 218,700-square-foot headquarters building at 5379 Gate Parkway called Town Center Two.
The company expects to move 800 to 900 employees currently working in two buildings in Flagler Center in South Jacksonville in the spring of 2019.
Dennis Reilley, one of five new directors brought into CSX Corp. during a sweeping management overhaul in March 2018, is retiring from the board.
Jacksonville-based CSX said in a Securities and Exchange Commission filing last week that Reilley is retiring Dec. 31 for “personal reasons.”
When the late Hunter Harrison joined CSX as chief executive officer in March 2017, backed by hedge fund Mantle Ridge LP, Harrison and four other Mantle Ridge-backed directors were added to the board, including Reilley.
Reilley is the retired CEO of Praxair Inc. and has served on boards of other major corporations.
Reilley’s retirement is the second recent change announced for CSX’s board. Board Chairman Edward Kelly is retiring in January and will be succeeded as chairman by John Zillmer, another of the Mantle Ridge-backed directors who joined in March 2017.
CSX has not named directors to replace Kelly and Reilley on the board.
Jacksonville-based SharedLabs Inc. last week announced a definitive agreement to merge with Denver-based Glowpoint Inc. under basically the same terms as their preliminary agreement announced in November.
However, the definitive agreement includes a 45-day “go-shop” provision that allows Glowpoint to solicit competing offers through Feb. 3.
SharedLabs will be the surviving company in the merger of the two technology companies. SharedLabs had been planning an initial public offering but will instead become public by merging with the already publicly traded Glowpoint.
If no competing bid emerges, the companies expect to complete the merger in the spring of 2019.
Icahn Automotive Group LLC announced last week it is buying Jacksonville-based RPM Automotive, which operates 10 auto service facilities in Northeast Florida.
Icahn Automotive is a subsidiary of Icahn Enterprises LP, the conglomerate founded by billionaire Carl Icahn. The automotive business operates more than 2,000 service centers under brands including Pep Boys, AAMCO and Precision Tune Auto Care.
“The acquisition of RPM Automotive complements Icahn Automotive’s existing footprint in the region and will accelerate our growth in an important market for us,” Icahn Automotive CEO Dan Ninivaggi said in a news release.
Terms of the deal were not announced.
A newly formed Jacksonville-based company called Talon Precision Optics LLC announced last week it has acquired TrackingPoint Inc., a Texas-based firearms technology company.
Talon said the deal gives it a comprehensive product portfolio and a presence in the defense and commercial firearms technology markets.
Terms of the deal were not announced.
The St. Joe Co. moved its headquarters from Jacksonville to Watersound in 2010 as it focused its real estate development activities on the Panhandle region of Florida.
In the wake of Hurricane Michael’s devastating impact on the area, St. Joe last week announced it is beginning work on a new residential community in Bay County.
The Brannonville community near Panama City will potentially have 800 homesites on 592 acres.
“The shortage of workforce housing in the region is why St. Joe chose to advance plans for Brannonville,” St. Joe Vice President Bridget Precise said in a news release.
“The scale of this site allows for various lot sizes, builder interests, phased expansions, and a quick start,” she said.
St. Joe expects to begin site work on the first phase of the community in 2019.
