By Lisa Kerner
Charlotte, N.C., Sept. 24 - Hampton Roads Bankshares, Inc. agreed to acquire Gateway Financial Holdings, Inc. in a transaction valued at $101 million, it was announced on Wednesday.
Both companies' boards of directors approved the definitive agreement that gives Gateway Financial shareholders 0.67 shares of Hampton Roads common stock for each share of Gateway Financial owned, a Hampton Roads news release said.
Gateway Financial preferred shareholders will receive comparable shares in the combined company.
The merger, slated to close in the fourth quarter of 2008, is conditioned on Gateway Financial raising approximately $30 million in additional capital.
Under the agreement, either party may terminate the merger if it is not completed by June 30, 2009. Terminating the merger in certain specified circumstances will obligate Gateway Financial to pay Hampton Roads a termination fee of $3.3 million, according to a form 8-K filed with the Securities and Exchange Commission.
D. Ben Berry, chairman and chief executive officer of Gateway Financial, will become president of Hampton Roads Bankshares and join its board of directors.
David R. Twiddy, president and chief operating officer of Gateway Financial, will become president and CEO of Gateway Bank & Trust Co. and an executive officer of Hampton Roads Bankshares.
Berry called the chance to join Gateway Financial with Hampton Roads "too good to pass up."
"By putting the banks together, we now have some very exciting opportunities in an increasingly competitive bank marketplace to reward our shareholders' support and confidence while continuing to deliver to our customers in a manner that allows them to be the best at what they do," Berry added.
Hampton Roads said seven members of the Gateway Financial board will join the Hampton Roads board.
McKinnon & Co. advised Hampton Roads. Gateway Financial was advised by Sandler O'Neill + Partners, LP.
Gateway Financial, located in Virginia Beach, Va., is the financial holding company for Gateway Bank & Trust, a regional community bank with 37 full-service financial centers. As of June 30, Gateway Financial had total assets of $2.1 billion, total deposits of $1.6 billion, total loans of $1.8 billion and total stockholders' equity of $164 million.
The combined company will have assets of approximately $3 billion.
Hampton Roads, located in Norfolk, Va., is the financial holding company for Bank of Hampton Roads and Shore Bank.
| Acquirer: | Hampton Roads Bankshares, Inc.
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| Target: | Gateway Financial Holdings, Inc.
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| Announcement date: | Sept. 24
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| Price per share: | 0.67 Hampton Roads shares
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| Transaction total: | $101 million
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| Termination fee: | $3.3 million
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| Expected closing: | Fourth quarter of 2008
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| Stock price of acquirer: | Nasdaq: HMPR: $10.20 on Sept. 23
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| Stock price of target: | Nasdaq: GBTS: $5.90 on Sept. 23
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