Failed deal with mystery buyer led to Jacksonville Bancorp deal
Before agreeing to an offer from Ameris Bancorp, officials of Jacksonville Bancorp Inc. did talk to another unidentified financial institution about a possible buyout.
The parent company of The Jacksonville Bank could not come to an agreement on a price with that institution, according to a proxy statement filed last week with the Securities and Exchange Commission.
However, those failed negotiations did lead to the merger agreement with Ameris, which was “highly motivated” to make an acquisition in the Jacksonville market after deciding to move its executive offices to Jacksonville, the filing said.
The buyout process started in March, when the CEO of the unidentified institution contacted Jacksonville Bancorp Chairman Donald Glisson to see if the company would be interested in a merger.
Through its financial adviser, Hovde Group LLC, Jacksonville Bancorp’s board of directors told the institution that it would be interested in a buyout at $14 a share. The stock was trading at about $11 at the time.
The CEO of the institution told Glisson in May that he would not go above $11 a share, so the negotiations ended.
While that deal didn’t work it out, it did prompt Jacksonville Bancorp’s board to consider seeking an acquisition, and it decided in July to have Hovde check with possible buyers.
As that was happening, Ameris Chief Financial Officer Dennis Zember heard at a community banking conference that Jacksonville Bancorp had retained Hovde as a financial adviser, the proxy filing said. So he contacted Hovde on July 28.
Zember and Ameris CEO Edwin Hortman then met with Hovde representatives and “informed Hovde that its executives were relocating to Jacksonville, Fla., and were highly motivated to complete a business combination in the Jacksonville, Fla., market,” it said.
Ameris is officially headquartered in Moultrie, Ga., but it signed a lease in early July to move its executives to offices in the Riverplace Tower on Jacksonville’s Southbank.
Ameris negotiated exclusively with Jacksonville Bancorp and reached an agreement on Sept. 30 to buy the bank for $16.50 a share in cash and stock, a total of $96.6 million.
The merger should be profitable for Ameris, according to the proxy filing.
Ameris reported earnings of 84 cents a share in the first nine months this year but if it was combined with Jacksonville Bancorp’s operations, its earnings would have been 94 cents a share, it said.
The companies are hoping to complete the merger in the first quarter of 2016.
Hovde also worked with American Enterprise
At the same time Hovde was working with Jacksonville Bancorp, it was also looking for a buyer for another Jacksonville bank.
American Enterprise Bankshares Inc. (AEB) had determined that it would need additional capital to make an interest payment due on subordinated debt, so it retained Hovde in June to explore its options, according to a proxy statement filed for its buyout agreement with Fidelity Southern Corp.
AEB is not publicly traded but it does have a diverse group of shareholders, so it filed a proxy for its pending merger.
Hovde began contacting banks to gauge interest in an acquisition of AEB in July and in August, two financial institutions expressed interest.
“Fidelity’s proposal was much higher than the other at $5.35 a share,” the proxy said.
Although there is no trading market for AEB’s stock, the proxy said the last known sale of the stock in a private transaction was for $3 a share in June 2013.
Fidelity Southern later increased its offer to $5.50 a share, and the two parties agreed to a sale at that price in October. AEB shareholders will receive Atlanta-based Fidelity Southern stock equal to $5.50 for each of their shares.
The total value of the deal was estimated at $27 million.
The proxy filing also indicates that AEB President Bennett Brown will become Fidelity Southern’s Jacksonville area market president after the merger.
Fidelity Southern, which operates under the Fidelity Bank name, currently operates five branches in the Jacksonville market and will add two by acquiring AEB.
CSX moving to Nasdaq
CSX Corp. last week announced it is moving its stock listing from the New York Stock Exchange to Nasdaq, a move that would have been unthinkable about 20 years ago. But in the Internet age, the move will have very little significance to most people.
In the pre-Internet age, we found stock prices by checking the newspaper in the morning, and a stock carried more prestige when it was listed with the other NYSE stocks.
These days, we find stock prices by typing a ticker symbol into a web site, with little thought as to where the stock is actually traded. There are some differences in the way stocks are traded on the NYSE and on Nasdaq but for the general public, it doesn’t matter at all.
The big difference between the two is price: It’s a lot cheaper to list a stock on Nasdaq.
CSX is listing its stock on the Nasdaq Global Select Market, which is the highest of three tiers of trading on Nasdaq. For a company with more than 150 million shares outstanding, such as CSX, the annual listing fee for that market is $155,000. CSX could also be subject to an entry fee of $225,000 for its initial listing on Nasdaq.
That’s still lower than the costs for the NYSE, which charges an annual fee of one-tenth of one cent for each outstanding share.
CSX’s last financial report listed 975 million shares outstanding, which would translate into an annual fee of $975,000. So the Jacksonville-based company will save money with the new listing.
“This decision is consistent with our commitment to reduce costs and uphold consistently high standards of corporate governance,” Chief Financial Officer Frank Lonegro said in a news release.
The new listing will take effect after the close of trading on Dec. 21, and the stock will continue to list under the ticker symbol “CSX.”
Arizona Chemical revenue falls
After agreeing to a buyout in September, Arizona Chemical Holdings Corp. reported revenue dropped almost 15 percent in the first nine months of this year to $621 million, due largely to currency fluctuations.
However, net income in the nine-month period was about the same at $39.9 million as expenses dropped, including lower costs for raw materials due to lower oil prices.
Arizona Chemical is a privately held specialty chemicals company with headquarters offices in Jacksonville and in the Netherlands.
The company agreed to a $1.37 billion buyout by publicly traded Kraton Performance Polymers Inc., and Arizona Chemical filed financial statements with the SEC in connection with the merger.
Analyst downgrades Rayonier AM
The outlook seemed brighter for Rayonier Advanced Materials Inc. when it settled a contract dispute with its largest customer two weeks ago, but one analyst downgraded its stock after the settlement was announced.
Jacksonville-based Rayonier AM signed a contract extension through 2019 with Eastman Chemical Co., which accounted for 31 percent of Rayonier AM’s 2014 sales.
However, RBC Capital Markets analyst Paul Quinn said in a research note that the contract extension is “likely to come at a high cost” for Rayonier AM, so he downgraded his rating on the stock from “sector perform” to “underperform.”
Quinn said market prices for cellulose specialty products, like those produced by Rayonier AM, are dropping, but Eastman has likely been paying higher prices to Rayonier AM.
Eastman wouldn’t have agreed to a contract extension without assurances of a price drop, Quinn said, and that suggests Rayonier AM’s prices will fall more steeply than its competitors in the next couple of years.
Still, the outlook isn’t all bad.
“We note that the company continues to generate cash and is well within any potential bank covenant constraints. We like that the company also has the optionality of producing additional volumes of fluff pulp should future specialty contract volumes come under pressure,” Quinn said.
Nexstar, Media General at ‘impasse’
Nexstar Broadcasting Group Inc. last week said it has “reached an impasse” in its attempts to negotiate a buyout of Media General Inc.
Media General responded by saying its board of directors “remains open to discussing and reviewing an improved proposal from Nexstar that would appropriately value the company.”
However, there was no indication that the companies would continue talks.
Nexstar made an unsolicited bid to buy Media General in September, which prompted talks between the two television broadcasters.
Texas-based Nexstar operates 106 television stations in 57 markets, including Jacksonville’s CW network affiliate WCWJ TV-17, which it bought from Media General in 2009.
Virginia-based Media General operates 71 stations in 48 markets.