Territorial Bancorp continues to turn away acquisition offers from Blue Hill Advisors, sticking with a previous proposed merger with Los Angeles-based Hope Bancorp.
The Hawaiian bank reiterated its commitment Monday to Hope’s $78.6 million all-stock transaction, as announced in April, even though Blue Hill bumped up its offer by 50 cents per share to $12.50 last week.
That represents a 27% premium over the Hope deal, based on the Los Angeles bank’s closing stock price from Wednesday, Blue Hill said.
“This increase makes our offer even more attractive,” former Bank of Hawaii CEO Allan Landon said in a statement.
It’s the third offer from Blue Hill that Territorial has rejected since Aug. 26.
Though the latest offer represents a 4% increase in value, it “continues to leave so many unanswered questions, such that the Blue Hill proposal remains highly uncertain and inferior to the Hope merger,” Territorial CEO Allan Kitagawa said in a statement Monday.
Territorial further called the Blue Hill proposal “unlikely to benefit Territorial shareholders.”
Blue Hill outlined in a presentation that its offer is backed by more than $3 billion in combined assets under management and capital support exceeding the required investment of more than $100 million.
Blue Hill also noted that in addition to the significantly higher value of nearly $23 million, the proposal provides an option for up to 30% of existing shareholders to continue to invest in the recovery of Territorial and a commitment to preserving the Hawaiian bank as a local lender.
Territorial, though, asserted that while Blue Hill relied on investments from anonymous investors, Hope signed a merger agreement with Territorial and has already invested money in the approval process.
Additionally, Territorial said, Blue Hill cannot provide any evidence to support that investors could secure regulatory approval quickly if needed. Meanwhile, due diligence has already been completed for the Hope deal with few conditions that remain to be reviewed, Territorial said.
“The Territorial Board already carefully considered the proposal on two separate occasions, and each time rejected the proposal for a number of reasons,” Kitagawa added. “The Territorial Board has now considered the latest information and, for a third time, has rejected what remains a highly speculative proposal.”
Territorial shareholders are set to meet Oct. 10 to vote on the Hope deal.
Jason Blumberg, a managing member of Blue Hill, asserted that “shareholders recognize the superiority of our offer and want Territorial to engage with us.”
Blumberg and Landon would both receive Territorial board seats under Blue Hill’s latest proposal.
Landon first approached $2.24 billion-asset Territorial with a $12-per-share cash offer Aug. 26 — well above the $8.82 per share Hope offered in April.
The Territorial board sent Landon a letter in early September, rejecting the offer. Landon replied, addressing some critiques and reiterating the offer. The board again sent Landon a rejection letter Sept. 12 and publicly disclosed the Blue Hill proposal.
Among other concerns, Territorial would have to pay Hope a $3 million termination fee if it were to entertain a competing offer.
