Entegra Financial’s $219.8 Million Merger with First Citizens Bank

Sandler O’Neill + Partners, L.P. acted as financial advisor to Entegra in connection with this transaction. Raleigh-based Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP represented First Citizens in the transaction; Hunton Andrews Kurth LLP represented Entegra.

First-Citizens Bank & Trust Company (First Citizens Bank) and Entegra Financial Corp. (Entegra) announced today the signing of a definitive merger agreement. Entegra provides deposit and loan services through its subsidiary, Entegra Bank.

The agreement provides for the acquisition of Franklin, N.C.-based Entegra Financial Corp. by First Citizens Bank, which is headquartered in Raleigh, N.C. The announcement was made jointly by Frank B. Holding Jr., chairman and chief executive officer of First Citizens Bank, and Roger Plemens, president and chief executive officer of Entegra.

The agreement has been approved by the boards of directors of both companies. The transaction is anticipated to close during the second half of 2019, subject to the receipt of regulatory approvals, the approval of Entegra’s shareholders, and the satisfaction of other customary closing conditions. Under the terms of the agreement, (1) cash consideration of $30.18 per share will be paid to the shareholders of Entegra for each share of its common stock and for each restricted stock unit after conversion to common stock, (2) each Entegra option will be canceled and each option holder will receive a cash payment and (3) no consideration will be paid to First Citizens Bank or its affiliates as a result of their ownership of shares of Entegra’s common stock. As of today, First Citizens Bank and/or its affiliates own approximately 1.56% of Entegra’s outstanding common stock. The total transaction value, including termination fee, is anticipated to be approximately $219.8 million.

On January 15, 2019, Entegra announced it had entered into a definitive agreement to combine with SmartFinancial, Inc. (SmartFinancial) in a strategic merger of equals, in which each share of Entegra common stock would be converted into 1.215 shares of SmartFinancial common stock. Based on the closing price of SmartFinancial’s common stock of $18.40 on January 14, 2019, this implied a transaction value of $22.36 per share, or approximately $158.2 million. Subsequent to that announcement, First Citizens Bank approached Entegra and its advisors with a significantly higher price to acquire the company. Under the terms of its definitive agreement with SmartFinancial, the board of directors of Entegra exercised its right to enter into discussions with First Citizens Bank. Ultimately, the board determined that the cash consideration offer of $30.18 from First Citizens Bank was a superior proposal to the agreement with SmartFinancial, and pursuant to its fiduciary duties and, as permitted under its agreement with SmartFinancial, entered into an agreement with First Citizens Bank. Under the terms of the First Citizens Bank agreement with Entegra, First Citizens Bank will pay a termination fee of $6.4 million to SmartFinancial on behalf of Entegra, which Entegra was obligated to pay under its agreement with SmartFinancial upon the termination of that agreement by Entegra.

As of December 31, 2018, Entegra reported $1.6 billion in consolidated assets, $1.2 billion in deposits and $1.1 billion in loans.

Entegra Bank opened in 1922 and is a state-chartered, full-service commercial bank with 18 offices and two loan production offices throughout Western North Carolina, Upstate South Carolina and North Georgia.

The Smith Anderson team advising First Citizens Bank in the merger was led by Gerald Roach (Picture) and Geoff Adams and was a collaborative effort with support from the Mergers & Acquisitions, Employee Benefits, Public Companies, and Employment, Labor and Human Resources practice groups.

Hunton Andrews Kurth LLP advised Entegra Financial Corp. with Peter Weinstock, Eric Markus, Steven Haas, Candace Moss and Zach Silvers.

Involved fees earner: Steven Haas – Hunton Andrew Kurth; Eric Markus – Hunton Andrew Kurth; Candace Moss – Hunton Andrew Kurth; Zachary Silvers – Hunton Andrew Kurth; Peter Weinstock – Hunton Andrew Kurth; Geoffrey Adams – Smith, Anderson, Blount, Dorsett, Mitchell & Jerni; Gerald Roach – Smith, Anderson, Blount, Dorsett, Mitchell & Jerni;

Law Firms: Hunton Andrew Kurth; Smith, Anderson, Blount, Dorsett, Mitchell & Jerni;

Clients: Entegra Financial Corp.; First Citizens Bank;


Author: Ambrogio Visconti