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Learn more about our investigation on our Shareholder Rights Blog:
October 23, 2013, Washington Banking and Heritage Financial announced the signing of a definitive merger agreement pursuant to which Washington Banking shareholders will receive 0.89 shares of Heritage common stock and
$2.75 in cash, a total compensation of
$16.89, for each share of Washington Banking common stock. The transaction is expected to close in the first half of 2014.
Is the Merger Best for Washington Banking and Its Shareholders?
Robbins Arroyo LLP's investigation focuses on whether the board of directors at Washington Banking is undertaking a fair process to obtain maximum value and adequately compensate shareholders in the merger. As an initial matter, the
$16.89 consideration represents a premium of only 18.28% based on the two companies' closing price on
October 22, 2013. That premium is substantially below the median one-day premium of 29.83% for comparable transactions in the last five years. In addition, as recently as
July 29, 2013, an analyst at Sandler O'Neal & Partners set a target price of
$17.00 per share.
Moreover, Washington Banking is currently experiencing success and growth in its business prospects, as indicated in its
October 23, 2013 press release announcing the company's financial results for its third 2013. In particular, Washington Banking reported:
earnings increased to $4.5 million from $2.9 million in the preceding quarter;
the loan portfolio grew 2% in the quarter and 6% year-over-rear; and
average loans in the first nine months increased 5% to $868.7 million from $831.3 million a year ago.
In announcing these results,
Bryan McDonald, chief executive officer and president of Washington Banking's Whidbey Island Bank, stated: "Our general business outlook continues to reflect the economic recovery in the region…. Loan demand is improving and our pipeline of activity remains strong. During the third quarter, we closed
$66.3 million in new commercial loans, renewed or extended
$80.4 million in existing commercial loans and funded
$38.4 million in residential mortgages, for both refinance and purchase transactions."
Given these facts, Robbins Arroyo LLP is examining Washington Banking's board of directors' decision to merge the company with Heritage now rather than allow shareholders to continue to participate in the company's continued success and future growth prospects, and whether they are seeking to benefit themselves.