OceanFirst Financial, the parent company of OceanFirst Bank, has agreed to acquire Capital Bank of New Jersey in an all-stock transaction.
The transaction is valued at approximately $31.33 per Capital Bank common share or approximately $80m in the aggregate (including options) based on OceanFirst’s closing stock price of $25.06 as of 25 October 25.
Founded in 2007, Capital Bank serves the Southern New Jersey and greater Philadelphia metro markets through four branches located in Cumberland, Gloucester, and Atlantic counties, and a loan production office in Burlington county.
Capital Bank’s expertise in serving small and medium sized businesses aligns with OceanFirst’s commitment to growing its commercial banking platform, and provides the opportunity to leverage OceanFirst’s broader product offering across Capital Bank’s client base.
Further, Capital Bank provides access to strong core funding at a low cost with ample liquidity, complementing OceanFirst’s current financial profile.
Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, upon completion of the merger, shareholders of Capital Bank will be entitled to receive 1.25 shares of OceanFirst common stock for each share of Capital Bank common stock.
The transaction is expected to close in the first quarter of 2019, subject to Capital Bank receiving the approval of its shareholders, receipt of all required regulatory approvals, and fulfillment of other customary closing conditions.
Based on OceanFirst’s closing stock price on October 25, 2018, the transaction value equates to 172% of Capital Bank’s September 30, 2018 tangible book value, 8.1% premium to core deposits, 13.7x Capital Bank’s core trailing twelve months earnings, and 8.0x Capital Bank’s core trailing twelve months earnings with cost savings.
Tangible book value per common share is expected to be diluted by approximately 1.4% at closing with a projected earnback period of approximately 3 years using the cross-over method. The transaction is expected to result in earnings per share accretion of approximately 2.0% in 2020 (the first full year of combined operations and synergies).
The combined company will be structured to support enhanced financial return targets and will remain “well-capitalized” under regulatory guidelines.
OceanFirst Financial Corp chairman and CEO Christopher Maher said: “We are excited for Capital Bank stakeholders to join the OceanFirst family, and we will use our shared knowledge of Southern New Jersey and the greater Philadelphia metro area to continue to enhance our leadership in these core markets.
“This transaction reflects a financially attractive in-market acquisition with low-risk that aligns with OceanFirst’s strategic objectives. We look forward to continuing to provide our clients best-in-class service and delivering enhanced value to our shareholders.”
Capital Bank president and CEO David Hanrahan said: “We are excited to announce our plans to join the OceanFirst team. Through access to additional product lines, enhanced operating scale, and increased shareholder liquidity, we will be better able to serve our customers, shareholders, and communities in which we operate.”
Piper Jaffray & Co. served as financial advisor to OceanFirst and Skadden, Arps, Slate, Meagher & Flom LLP served as OceanFirst’s legal counsel. Boenning & Scattergood, Inc. served as financial advisor to Capital Bank and Stevens & Lee served as its legal counsel.
Source: Company Press Release