First Citizens BancShares Inc. (“First Citizens”) (Nasdaq:FCNCA)
announced today that it has made a proposal to acquire KS Bancorp,
Inc. (“KS Bancorp”) (OTCBB:KSBI) for $35.00 per share in cash, in a
transaction valued at approximately $45.8 million, representing a
49.6% premium over KS Bancorp's closing trading price on July 12,
2017, and a 84% premium over KS Bancorp’s book value per share as
of March 31, 2017. The proposal was conveyed today in a letter to
KS Bancorp’s Board of Directors.
First Citizens has decided to make its proposal public in order
to inform KS Bancorp's shareholders of the compelling proposal that
would provide immediate liquidity to them at a substantial premium
to book value and the market’s assessment of KS Bancorp’s
value.
“Our objective is to engage in substantive discussions with KS
Bancorp and conduct customary due diligence so that we and KS
Bancorp can together quickly bring this compelling transaction to
KS Bancorp’s shareholders,” said Frank B. Holding, Jr., chairman
and chief executive officer of First Citizens. “We are disappointed
by KS Bancorp’s rejection of our offer without any discussion, and
were surprised that the reason given for this was a contemplated S
corporation reorganization that we understand would involve a
buyout of a significant number of KS Bancorp shareholders. We
believe that KS Bancorp shareholders will favor the immediate
liquidity at a substantial premium that our acquisition proposal
would provide.”
Below is the full text of the letter that was sent today
to KS Bancorp’s Board of Directors:
July 13, 2017
Board of DirectorsKS Bancorp, Inc.1031 North
Brightleaf BlvdP.O. Box 661Smithfield, North Carolina
27577-0661
Dear Members of the Board:
On June 30, 2017, we delivered a formal
indication of interest to KS Bancorp, Inc.’s President and CEO
Harold Keen which outlined our proposal to acquire KS Bancorp at a
purchase price of $33.00 per share of KS Bancorp common stock in
cash. By letter dated July 11, 2017, Mr. Keen informed us that,
after fully reviewing the financial, corporate and other aspects of
our indication of interest, KS Bancorp’s Board of Directors
determined its recently-adopted strategy of reorganizing as an S
corporation would be more beneficial to KS Bancorp’s shareholders
than accepting our proposal. We were surprised by the Board’s brisk
rejection of our proposal, without engaging with us in further
discussion, ostensibly in favor of an S corporation reorganization
which we understand would involve buying out a significant number
of your shareholders.
In light of your rejection of our proposal, and
as a clear sign of our seriousness to effect a transaction, we are
increasing our proposal to acquire KS Bancorp to a price of $35.00
per share in cash1, representing approximately a 49.6% premium over
KS Bancorp’s closing trading price of $23.40 as of July 12, 2017,
and a 84% premium over KS Bancorp’s book value per share as of
March 31, 2017. We believe this transaction is compelling for your
shareholders as they would receive immediate liquidity at a
substantial premium to both book value and the market’s assessment
of KS Bancorp’s value. Our proposal is not conditioned on
financing.
The valuation underlying our proposal is based
solely on publicly available information. We believe that through a
constructive dialogue with the Board and management and access to
customary diligence materials, we will be in a position to
expeditiously reach a definitive agreement. We are committed to
undertaking due diligence in a manner least disruptive to KS
Bancorp’s employees and are prepared to immediately enter into a
non-disclosure agreement in order to get started.
In the face of the significant premium we are
proposing, we urge you to fulfill your fiduciary duties to your
shareholders by engaging with us without delay.
We are publicly releasing the text of this
letter concurrent with its delivery to you to ensure that your
shareholders are fully apprised of the substantial premium that we
would be willing to pay for their shares. We believe that your
shareholders will emphatically support the Board’s entering into a
constructive and professional dialogue with us.
We are prepared to meet immediately with you and
your advisors in order to discuss our proposal. Our proposal is, of
course, subject to customary due diligence and the execution of a
mutually acceptable definitive agreement on customary terms.
Consummation of the transaction would be subject to receipt of KS
Bancorp shareholder approval and customary regulatory approvals.
Nothing in this letter is intended to create a legally binding
obligation, and no such obligation will exist unless and until a
definitive transaction agreement is executed.
The Board of Directors of First Citizens remains
highly committed to this transaction and would welcome the
opportunity to meaningfully engage with you to explore this
opportunity. We look forward to hearing from you.
Sincerely yours,
/s/ Craig L. Nix
Craig L. NixChief Financial Officer
1 Consideration to be paid either in all
cash or, as indicated in our indication of interest, in the form of
a combination of cash and First Citizens perpetual preferred stock,
pending further discussion to determine the appropriate and most
tax-advantageous mix for KS Bancorp’s shareholders.
About First Citizens
Founded in 1898 and headquartered in Raleigh, N.C., First
Citizens Bank serves customers at more than 500 branches in 22
states. First Citizens Bank is a wholly owned subsidiary of First
Citizens BancShares, Inc. (Nasdaq:FCNCA), which has $34 billion in
assets. For more information, call toll free 1.888.FC DIRECT
(1.888.323.4732) or visit www.firstcitizens.com.
Forward Looking Statements
Statements contained in this release, which are not historical
facts, are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks and uncertainties which could cause
actual results to differ materially from those currently
anticipated due to a number of factors including, by way of example
and without limitation, plans, intentions and expectations
regarding First Citizen’s proposal to acquire KS Bancorp and
expectations of the benefits of a potential transaction.
Forward-looking statements speak only as of the date made. First
Citizens undertakes no obligation to update or revise any
forward-looking statements to reflect events or circumstances
arising after the date on which they were made, except as otherwise
required by law. As a result of these risks and uncertainties,
readers are cautioned not to place undue reliance on any
forward-looking statements included herein or that may be made
elsewhere from time to time by, or on behalf of, First
Citizens.
Additional Information
This communication is not an offer to purchase or a solicitation
of an offer to sell any securities. Any solicitation or offer will
only be made through separate materials filed with the U.S.
Securities and Exchange Commission (the “SEC”). Holders of the
common stock of KS Bancorp and other interested parties are urged
to read these materials when and if they become available because
they will contain important information. When and if available,
such documents can be obtained free of charge at the SEC’s website,
www.sec.gov.
Contact: Barbara Thompson
First Citizens BancShares
919.716.2716
First Citizens BancShares (NASDAQ:FCNCA)
Historical Stock Chart
From Mar 2024 to Apr 2024
First Citizens BancShares (NASDAQ:FCNCA)
Historical Stock Chart
From Apr 2023 to Apr 2024