In doing some prep work ahead of earnings, I’d flagged Franklin Financial Network (FSB)
as a name to cover given what I thought would be an increasing
likelihood of a buyout as management cleaned up and repositioned the
balance sheet. Turns out that was the right assumption, as Franklin
Financial announced in conjunction with fourth quarter earnings that it
had accepted a buyout offer from FB Financial (FBK), a fellow Tennessee-based bank company.
I
think Franklin Financial shareholders are getting a pretty good deal
here. Even though FB Financial shares have sold off a bit, the
approximately $38/share effective deal price as of this writing is about
1.4x tangible book value – a small premium to the highest ROTCE
Franklin has posted in recent years and a hefty premium to the current
financial performance. For those investors who don’t want to sell out,
FB Financial isn’t a bad bank, though I don’t see the shares trading at a
significant discount today unless management can really work some
synergy magic with Franklin.
Read more here:
Franklin Financial's Restructuring Work Pays Off With A Good Buyout Offer
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