Park Sterling buying First Capital Bancorp in $82.5M cash-and-stock deal

Abstract

Charlotte, N.C.-based Park Sterling Corp. ($2.44 billion), parent company of Park Sterling Bank, agreed to acquire Glen Allen, Va.-based First Capital Bancorp Inc. ($616.9 million) in a cash-and-stock deal valued at approximately $82.5 million, based on Park Sterling's closing share price of $6.80 on Sept 30.

Charlotte, N.C.-based Park Sterling Corp. ($2.44 billion), parent company of Park Sterling Bank, agreed to acquire Glen Allen, Va.-based First Capital Bancorp Inc. ($616.9 million) in a cash-and-stock deal valued at approximately $82.5 million, based on Park Sterling's closing share price of $6.80 on Sept 30.

Upon deal completion, the combined company will have approximately $3.1 billion in total assets, $2.2 billion in total loans, $2.4 billion in total deposits and a network of 60 offices in the Carolinas, Virginia and north Georgia. At closing, First Capital Bank is expected to merge into Park Sterling Bank, according to an Oct. 1 news release.

Under the terms of the merger agreement, First Capital common shareholders will have the right to receive either $5.54 in cash or 0.7748 of a Park Sterling share for each First Capital share they hold, subject to the limitation that the total consideration for shareholders will consist of 30.0% in cash and 70.0% in Park Sterling shares. In addition, First Capital warrant holders will have the right to receive either $1.77 in cash or 0.24755 Park Sterling shares for each First Capital warrant they hold, subject to the limitation.

The First Capital shares and warrants exchanged for stock will convert to Park Sterling shares in what is intended to be a tax-free exchange. Cash will be paid in lieu of fractional shares. The transaction value at the time of the proposed merger may change due to potential fluctuations in the price of Park Sterling stock, the release noted.

It added that the merger will strengthen Park Sterling's position in the Richmond, Va., metropolitan statistical area, which will become its second largest deposit market after the Charlotte-Concord-Gastonia, N.C. to S.C., MSA, by expanding the distribution network from two to 10 branches, adding an experienced lending team and gaining senior market management and credit risk leadership.

The deal is expected to close in the first quarter of 2016, subject to customary conditions, including approval by First Capital's shareholders and receipt of regulatory approval. John Presley, managing director and CEO of First Capital, will transition from executive management to a consulting role with the company at closing.

Park Sterling's board will also appoint two independent, Richmond-based First Capital directors to join the Park Sterling board, to include First Capital Chairman Grant Grayson, who is a partner in law firm LeClairRyan.

Keefe Bruyette & Woods Inc. served as financial adviser to Park Sterling, while McGuireWoods LLP served as outside legal counsel. Banks Street Partners LLC served as financial adviser to First Capital, while LeClairRyan served as outside legal counsel to First Capital.

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