The Deal: East West Gets Approval for MetroCorp Acquisition

NEW YORK (TheStreet) -- MetroCorp Bancshares (MCBI) and East West Bancorp (EWBC). have the regulatory approvals necessary to close East West's $275 million acquisition of the Texas bank.

MetroCorp said Tuesday that the State of California Department of Business Oversight approved the merger application and that the Federal Reserve Bank of San Francisco has indicated it has no objections to the deal without the filing of a formal application.

Required approvals from the Texas Department of Banking and the China Banking Regulatory Commission--East West has bank operations in China--are also in hand. Texas gave its nod based on the Federal Reserve waiver and the Department of Justice waiting period following Fed bank merger approvals has passed, a source said. The China process is also complete as far as the companies' ability to close the deal is concerned, the source said.

MetroCorp shareholders are scheduled to vote on the merger Dec. 16.

The companies currently expect to close the deal before the end of January and Jan. 17 is a target date. The terms of the transaction are defined in part by MetroCorp's tangible equity at the end of the month prior to the merger close, which will be the December month. MetroCorp will have to close their books before the deal close.

The merger calls for East West to acquire MetroCorp shares for the lesser value of $14.60 per share or 1.72 times the per share adjusted tangible equity of MetroCorp. The tangible equity is calculated by reducing total equity by intangible assets, goodwill and preferred equity. According to the proxy, as of Sept. 30, 2013 MetroCorp's tangible equity was about $165.76 million, based on shareholders' equity of $180 million less intangible assets and goodwill of $14.4 million. The merger agreement also calls for a $7 million adjustment that puts the figure at $158.76, which multiplied by 1.72 times gives $273.065 million, or about $14.60 per share based on 18.69 million shares outstanding.

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