Home BancShares Open to M&A Possibilities Pressured by Activist Investor
Home BancShares, based in Conway, Arkansas, has expressed its willingness to buy certain banks that may be pushed to sell by the activist investor, HoldCo Asset Management. This comes in the wake of recent public campaigns by HoldCo against regional banks, pushing for changes in their business strategies.
Meeting Between Home BancShares and HoldCo
John Allison, Chairman and CEO of Home BancShares, recently met with representatives from HoldCo Asset Management to gain a better understanding of the group’s strategy. The meeting, which took place at the Stephens Annual Investment Conference in Nashville, focused on HoldCo’s recent public campaigns against four regional banks, including Comerica, which ended up agreeing to sell itself in October.
During a question-and-answer session, Allison stated his willingness to be a potential buyer for banks targeted by HoldCo in their area. “I said, if you hit on one that we’re sitting on in our area somewhere, I said, we’ll be your buyer,” Allison stated. “We’re open to whatever comes.”
HoldCo’s Campaign Against Regional Banks
HoldCo Asset Management, based in South Florida, has recently launched public campaigns against Eastern Bankshares in Boston, Columbia Banking System in Tacoma, Washington, and First Interstate BancSystem in Billings, Montana, threatening to pursue proxy battles at all three banks. However, they later withdrew these threats after both banks promised to “swear off” mergers.
HoldCo’s aggressive strategy has drawn criticism from some quarters, but also garnered the attention of potential buyers like Home BancShares. Allison echoed HoldCo’s complaints regarding certain bank deals, warning that banks with stagnant stock prices may face a reckoning.
Home BancShares’ Acquisition Plans
Home BancShares has a history of acquisitions and is currently on the brink of announcing its latest acquisition. Allison confirmed that the $22.7 billion-asset bank has signed a letter of intent to buy an unnamed bank, with the deal expected to be announced in December.
Without revealing much about the seller, Allison mentioned that it is a “good bank [with] good people” operating in “good markets”, though it has some “problems” with unrealized losses on its balance sheet. The seller reportedly has “several billion dollars” of assets.
The Future for Home BancShares
Home BancShares’ banking arm, Centennial, has branches in Arkansas, Florida, Texas, Alabama, and New York City. The bank’s CEO noted that there are not many lucrative acquisition opportunities left in Florida.
The upcoming deal, which will be Home’s first since its acquisition of Happy State Bank in Lubbock, Texas in April 2022, is expected to be beneficial to the company. “If we can complete this deal, it will be accretive to book, accretive to tangible book and accretive to EPS on day one, not four years from now,” Allison stated.
It is worth noting that the Happy State Bank transaction brought about asset-quality issues and a protracted legal dispute for Home BancShares. However, the company remains undeterred in its acquisition strategy and open to future opportunities.
Source: Here
