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Blue Hill Ups the Stakes for Territorial – Merger Arbitrage Mondays

  • September 30, 2024

Territorial Bancorp (TBNK): $10.39

Market Cap: $91.77 M

Hawaii-based Territorial Bancorp entered an all-stock merger agreement in April to be acquired by regional Korean-American bank Hope Bancorp (HOPE) for $78.6 million. According to the terms of the agreement, Territorial shareholders were set to receive 0.8048 shares of Hope Bancorp common stock for each Territorial share, valued at $8.82 per share—a 24.75% premium based on Territorial’s last closing price. At the time, this seemed like a fair deal, offering Hope an opportunity to expand its presence across both the continental United States and the Hawaiian Islands.

However, recently, Territorial Bancorp received a competing offer from Blue Hill Advisors, backed by a group of prominent bank investors, including former Bank of Hawaii Chairman and CEO Allan R. Landon. Blue Hill proposed acquiring the Hawaiian regional lender for $12.00 per share in cash, representing a 22% premium over the last price before the Blue Hill announcement and a 70% premium since Territorial’s initial merger announcement with Hope.

Despite this higher offer, Territorial rejected it, citing provisions in its merger agreement with Hope that restrict the company from pursuing alternative offers unless they are “reasonably likely to lead to a Superior Proposal.” Last week, Blue Hill and Landon raised their offer to $12.50 per share.

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