A Hawaii bank is reaffirming its intentions to merge into Los Angeles-based Hope Bancorp after an investor group swooped in with an allegedly “uncertain” higher-dollar purchase offer.
Territorial Bancorp is still planning to be acquired by Hope in a $78.6 million stock deal, as announced in April, it said Thursday, despite an unsolicited offer by Blue Hill Advisors last month.
Territorial rejected Blue Hill’s advances Sept. 6 and Sept. 12, but Blue Hill reiterated its offer to buy the Hawaii bank for $12 per share. Hope, by contrast, offered in April to acquire Territorial for $8.82 per share, all-stock.
Though Blue Hill’s letter suggests it and other unidentified investors would provide a higher purchase price, significant factors make it “highly uncertain and inferior to the merger agreed upon with Hope,” Territorial CEO Allan Kitagawa said in a prepared statement.
“In comparison to the Hope merger, where we have an experienced acquiror and a fully negotiated merger agreement, and where all required regulatory applications have been made and are being processed, and no third-party financing is required, the Blue Hill proposal is highly speculative,” Kitagawa said. “We again urge shareholders to vote ‘yes’ in favor of the proposed merger with Hope Bancorp.”
Territorial has scheduled an Oct. 10 special meeting for stockholders to vote on the Hope deal.
Former Hawaii banking executive Allan Landon, representing Blue Hill, said the investor group’s offer was “significantly better for Territorial's shareholders and other constituents” than Hope’s.
Blue Hill said its proposal would keep Territorial under local leadership, provide Territorial a chance to return to profitability and growth, and create jobs in Hawaii as the bank invests in growth and technology.
Under Blue Hill, Territorial’s board would be reconstructed to include Landon, Blue Hill financial adviser Jason Blumberg and a combination of local business or community leaders.
But Territorial’s board rejected the offer for multiple “flaws,” including that the group of largely unidentified investors hasn’t provided evidence of the financial means to back up the offer, nor evidence to prove that the group “could secure the required regulatory approvals promptly, if at all.”
Additionally, Territorial noted that due diligence has already been completed for the Hope deal and most conditions have already been satisfied. Neither is true for a potential Blue Hill deal, Territorial said.
Landon said in a prepared statement that Blue Hill “requested the opportunity to engage with the Board, but the terms of the Hope merger agreement prevented that.”
For one, Territorial would have to pay Hope a $3 million termination fee if it were to entertain another offer.
“If given the opportunity, we are prepared to move quickly and would expect to close our investment by year end,” Landon said.
Territorial said it expects the Hope deal to close by year end, noting that it will provide “many advantages for its customers and employees as it becomes part of a larger organization with greater resources, enhanced technology platforms, and an expanded array of banking products and services.”
Spokespeople for Territorial and Hope did not return requests for further comment. A spokesperson for Blue Hill directed Banking Dive to a Sept. 17 press release, and said the ultimate decision lies with the bank's shareholders.
