FNB United To Merge With Bank Of Granite; Shares Surge 4/27/2011 11:42 AM ET RELATED NEWSFNB United Corp., Bank Of Granite Corp.
FNB United Corp. (FNBN: News ), the parent company of CommunityOne Bank, N.A., Wednesday announced its plan to merge with Bank of Granite's parent company Bank of Granite Corp. (GRAN). Following news, FNB shares climbed 76 percent on the Nasdaq while Bank of Granite stock soared over 59 percent.
Under the merger deal, Bank of Granite shareholders will receive 3.375 FNB common shares in exchange for each Bank of Granite common share they own. The transaction is expected to close during the third quarter of 2011.
The merger of these 100-year-old institutions is subject to the successful recapitalization of FNB, in addition to other regulatory approvals. On April 6, the U.S. Treasury has issued a letter indicating its agreement to exchange FNB's preferred stock held by the Treasury for FNB common stock having a value equal to the terms in the merger and investment agreements.
The merger will create a North Carolina community banking organization with about $2.9 billion in assets, $2.4 billion in deposits and 63 full-service banking offices.
The combined company will be called FNB United Corp. with headquarters in Asheboro, North Carolina. The company will be operated by a new management led by Brian Simpson as Chief Executive Officer and Bob Reid as President.
Simpson is a former senior executive and Operating Committee member at Wachovia Corp.'s predecessor First Union Corp. with 17 years of banking experience. Reid has 30 years of financial services experience at Wachovia and First Union.
CommunityOne and Bank of Granite will be operated as separate entities until a future date. After that, they will be combined under the name CommunityOne Bank, N.A.
Private equity firms Carlyle Group and Oak Hill Capital Partners have agreed with FNB to invest $77.5 million as part of a $310 million private placement of FNB's common stock. Each will receive about 484 million FNB common shares at the closing not to exceed 24.9 percent of the then-outstanding shares of common stock, valued at $0.16 a share.
The combined company's board of directors will include one representative each from Carlyle and Oak Hill, and two FNB and one Bank of Granite board members.
FNBN rose $0.17 or 78 percent and is trading at $0.42 on 611,679 shares.
GRAN is trading at $0.8601, up $0.3201 or 59.28 percent, on a volume of 786,263 shares.
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