Atlantic Capital Bancshares, Inc. and First Security Group, Inc. jointly announced Wednesday the execution of an amendment to the definitive merger agreement previously announced on March 25, to adjust the mix of consideration to be provided to FSG shareholders in the merger. The amendment has been unanimously approved by the boards of directors of each company.
Atlantic Capital is a bank holding company headquartered in Atlanta and the parent of Atlantic Capital Bank. First Security is a bank holding company headquartered in Chattanooga and the parent of FSGBank, N.A.
Under the original terms of the merger agreement, FSG shareholders would have received merger consideration in the form of 40 percent cash and 60 percent Atlantic Capital common stock. Under the amended terms, FSG shareholders will receive a minimum of 65 percent and a maximum of 70 percent Atlantic Capital common stock, with the remainder in cash. No other terms of the agreement were amended.
FSG shareholders may elect cash equal to $2.35 per share, stock based on a fixed exchange ratio of 0.188 shares of Atlantic Capital common stock for each FSG share or any combination thereof, subject to the aggregate cash consideration totaling at least 30 percent, but no more than 35 percent. Atlantic Capital intends to register its shares with the SEC and seek a listing on NASDAQ concurrent with closing of the transaction.
“During the last two months, our management teams have laid the foundation for the integration and operational structure of our combined institution.," said Douglas L. Williams, president and chief executive officer of Atlantic Capital. "The opportunities for enhanced revenue and growth are evident in these discussions. As we further refined our objectives through this process, we believe that enhancing our capital position by adjusting the cash and stock mix of the transaction will better position us to meet our longer-term objectives.”
The amendment increases the estimated pro forma shareholders equity as of March 31, from approximately $264 million to between $272 million and $280 million. Additionally, the estimated pro forma consolidated total risk-based capital ratio increases by approximately 35 and 70 basis points to 11.71 percent and 12.06 percent at the maximum and minimum cash levels, respectively.
“The proposed merger, which has been well received in our local markets, has also been viewed favorably by individual and institutional investors,” said D. Michael Kramer, president and chief executive officer of First Security. “Based on conversations over the last two months with a wide variety of FSG shareholders, coupled with the price of FSG stock on the NASDAQ market since announcement, we believe there will be significant interest in electing Atlantic Capital shares in the merger. This amendment allows for a higher level of stock participation for FSG shareholders, while still providing cash for those shareholders desiring additional liquidity, but most importantly, increases the capital position for the benefit of all shareholders.”
The transaction is expected to close early in the fourth quarter of 2015 and is subject to Atlantic Capital and First Security stockholder approval, regulatory approval and other conditions set forth in the merger agreement. Pursuant to the agreement’s terms, Atlantic Capital Bank will merge with and into FSGBank.