By Lisa Kerner
Charlotte, N.C., May 18 - CapitalSource Inc. entered into a definitive agreement to acquire TierOne Bank's holding company, TierOne Corp., in a stock and cash transaction valued at about $652 million, or $34.46 per share. The actual value on consummation of the transaction will depend on CapitalSource's share price at closing.
The agreement calls for each TierOne share to be exchanged for $6.80 in cash plus 0.675 of a share of CapitalSource, according to a company news release. Stockholders will receive an additional 0.405 of a CapitalSource share if CapitalSource's stock price, based on a 10-day trading period prior to closing, is less than or equal to $25.1852. However, if CapitalSource's stock price is greater than $25.1852, shareholders can elect either $10.20 in cash or a fraction of a CapitalSource share having a value equal to $10.20.
Both companies' boards of directors have approved the deal, which is expected to close in the fourth quarter of 2007.
TierOne Bank will become a subsidiary of CapitalSource, with TierOne chairman and chief executive officer Gil Lundstrom as its chief executive officer, according to a company news release.
"The strategic partnership with CapitalSource is a great transaction for the shareholders, customers, communities and employees of TierOne, and will be virtually transparent," Lundstrom said in the release.
"TierOne is the cornerstone of CapitalSource's bank strategy, and the bank's headquarters will continue to be in Lincoln, Nebraska under its existing name; its management and employees will remain intact, and current customer products and services, account numbers, checks, contracts and service relationships will not change."
CapitalSource was advised by Citigroup Global Markets Inc., while Sandler O'Neill advised TierOne.
TierOne Bank is a $3.4 billion federally chartered savings bank located in Lincoln, Neb.
CapitalSource is a commercial lending, investment and asset management business based in Chevy Chase, Maryland.
| Acquirer: | CapitalSource Inc.
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| Target: | TierOne Corp.
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| Transaction value: | $652 million
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| Price per share: | $6.80 in cash and 0.675 of a CapitalSource share
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| Announcement date: | May 18
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| Expected closing: | Fourth quarter of 2007
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| Stock price for acquirer: | NYSE: CSE: $25.86 on May 17
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| Stock price for target: | Nasdaq: TONE: $24.92 on May 17
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