VyStar CU Proposed Bank Purchase Delayed a Third Time
If certain regulatory hurdles are not cleared by April 30, either financial institution will be allowed to call off the deal.
For the third time, VyStar Credit Union and Heritage Southeast Bank said they have mutually agreed to extend the “outside date” to June 30 to complete the industry’s largest credit union-bank acquisition deal.
But in a prepared statement released late Thursday afternoon, the financial institutions also agreed to allow either party to terminate the agreement if certain regulatory hurdles are not cleared by April 30.
Even though the regulatory hurdles were not specified, HSBI, the parent company of the bank, appears to be optimistic the deal will get done. VyStar on Friday said it is “unable to comment on regulatory matters and therefore, we have no comment.”
“Our primary focus has always been on achieving the best results for our shareholders through offering the best products and services throughout our footprint,” Leonard A. Moreland, CEO of HSBI, said. “Our dedicated employees come to work each and every day to help achieve our mission. The combination of Heritage Southeast Bank with VyStar allows us to continue that strategy and remains a priority.”
What’s more, VyStar has waived its exclusivity clause commencing Friday. However, HSBI is prohibited from entering into any definitive agreement with another party so long as the VyStar agreement remains in place, according to HSBI’s prepared statement.
On March 31, 2021, the $11.6 billion Vystar in Jacksonville, Fla., agreed to buy the $1.6 billion Heritage Southeast Bank of Jonesboro, Ga., for approximately $189 million.
Originally, the financial institutions set Dec. 31, 2021, to secure regulatory approvals. But in October they agreed to extend that deadline to Feb. 28, only to extend it for the second time to March 31.
These delays are expected to increase the price that VyStar will pay to buy the bank.
When the financial institutions agreed in October to extend the deadline date from Dec. 31 to February, according to terms of the purchase agreement, the aggregate purchase price paid by VyStar to HSBI will increase by an amount equal to HSBI’s consolidated net profit, after certain deductions, for each month from Oct. 1, 2021, through the closing date. For the nine months ending Sept. 30, 2021, HSBI’s monthly consolidated net profit, less certain deductions provided for in the purchase agreement, averaged approximately $1.2 million per month, according to HSBI’s October prepared statement.