Territorial Bancorp Reaffirms Its Board’s Commitment to Proposed Merger with Hope Bancorp

Rhea-AI Summary

Territorial Bancorp Inc. (TBNK) has reaffirmed its commitment to the proposed merger with Hope Bancorp, announced on April 29, 2024. The company rejected an unsolicited proposal from Blue Hill Advisors to acquire Territorial, citing it as highly uncertain and inferior to the Hope merger agreement. The Territorial Board found multiple flaws in the Blue Hill proposal, including:

• Lack of evidence of financial backing
• Uncertainty about securing regulatory approvals
• Various conditions, including due diligence and a 70% tender offer requirement

In contrast, the Hope merger has a fully negotiated agreement, regulatory applications in process, and no third-party financing required. Territorial urges shareholders to vote 'yes' for the Hope merger, emphasizing its potential benefits for customers, employees, and long-term strengthening of the company.

Positive

• Reaffirmation of commitment to Hope Bancorp merger
• Hope merger agreement is fully negotiated and in advanced stages
• No third-party financing required for Hope merger
• Potential for enhanced resources and technology platforms post-merger

Negative

• Rejection of potentially higher purchase price offer from Blue Hill Advisors
• Uncertainty surrounding shareholder approval for Hope merger

Insights

Financial Analyst

Territorial Bancorp's reaffirmation of its merger with Hope Bancorp, despite a competing offer from Blue Hill Advisors, signals strong confidence in the original deal. The Board's rejection of Blue Hill's proposal, citing uncertainty and inferiority, underscores the value they see in Hope's offer. Key factors favoring the Hope merger include:

• A fully negotiated agreement
• Regulatory applications in process
• No third-party financing required

These elements reduce execution risk significantly. The lack of credible financial backing and regulatory approval assurances in Blue Hill's offer further justifies the Board's decision. For investors, this steadfast commitment to the Hope merger suggests a higher probability of deal completion and potentially smoother post-merger integration, which could positively impact long-term shareholder value.

Legal Expert

The Board's decision to reject Blue Hill's proposal demonstrates strong fiduciary responsibility. By thoroughly evaluating the offer with independent advisors, they've acted in shareholders' best interests. The legal risks associated with Blue Hill's proposal are significant:

• Unidentified investors raise disclosure concerns
• Lack of evidence for regulatory approval capability could lead to regulatory hurdles
• The 70% tender offer condition introduces execution uncertainty

In contrast, the Hope merger has cleared major legal milestones. The SEC filing of Form S-4 and distribution of the Proxy Prospectus indicate substantial progress in regulatory compliance. This transparency and regulatory advancement significantly reduce legal risks for Territorial and its shareholders, making the Hope merger a more legally sound option.

Market Research Analyst

The market implications of Territorial's decision are multifaceted. By rejecting Blue Hill's nominally higher offer, Territorial signals that deal certainty trumps potential short-term gains. This strategy aligns with current market trends favoring stability and proven track records in M&A activities. Key market considerations include:

• Synergy potential with Hope's larger resource base and technology platforms
• Enhanced competitive positioning in the banking sector
• Expanded product offerings potentially leading to increased market share

The market is likely to view this decision positively, as it demonstrates prudent risk management and a focus on long-term value creation. Investors should anticipate potential short-term volatility as the market digests this information, but the overall outlook for the merged entity appears favorable, given the strategic fit and operational synergies highlighted in Territorial's statement.

Rejects Blue Hill Proposal as Highly Uncertain, Inferior to Hope Merger Agreement and Unlikely to Benefit Territorial Shareholders

HONOLULU, Sept. 19, 2024 (GLOBE NEWSWIRE) -- Territorial Bancorp Inc. (“Territorial”) today reaffirmed the commitment of its Board of Directors to the proposed merger with Hope Bancorp, Inc. (“Hope”) that was announced on April 29, 2024. The announcement was made in response to an unsolicited proposal from Blue Hill Advisors LLC (“Blue Hill”) to acquire Territorial.

“The unsolicited letter from Blue Hill claims to provide a nominally higher purchase price, but there are significant factors making the proposal highly uncertain and inferior to the merger agreed upon with Hope,” said Allan S. Kitagawa, Chairman, CEO and President of Territorial. “The Territorial Board carefully considered the proposal on two separate occasions, and after weighing the advice of independent legal and financial advisors, the Board rejected the proposal. In comparison to the Hope merger, where we have an experienced acquiror and a fully negotiated merger agreement, and where all required regulatory applications have been made and are being processed, and no third-party financing is required, the Blue Hill proposal is highly speculative. We again urge shareholders to vote “yes” in favor of the proposed merger with Hope Bancorp.”

The Blue Hill proposal was found to contain multiple flaws:

• It was made on behalf of a group of largely unidentified investors who provided no evidence that they possessed the financial means to back up their offer.
• Similarly, no evidence was provided to assure the Territorial Board that the unidentified investor group could secure the required regulatory approvals promptly, if at all.
• The proposal was subject to a variety of conditions, including due diligence as well as the completion of a tender offer where at least 70% of Territorial’s outstanding shares are submitted for cancellation. By contrast, a detailed due diligence review has already been completed and only a minimal number of remaining conditions are needed to complete the Hope merger.
  

These and other aspects of the Blue Hill proposal led the Territorial Board to reject it in the long-term interests of shareholders.

The proposed merger with Hope is expected to bring together two companies that share long-standing commitments to their customers and communities. Territorial’s customers will continue to benefit from the bank’s strong focus on relationship banking, personalized service and tailored financial solutions. At the same time, the proposed combination is expected to strengthen Territorial for the long term, providing many advantages for its customers and employees as it becomes part of a larger organization with greater resources, enhanced technology platforms, and an expanded array of banking products and services.

Additional Information about the Hope Merger and Where to Find It

In connection with the proposed Hope Merger, Hope has filed with the U.S. Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4, containing the Proxy Prospectus, which has been mailed or otherwise delivered to Territorial’s stockholders on or about August 29, 2024, as supplemented September 12, 2024.  Hope and Territorial may file additional relevant materials with the SEC. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR FURNISHED OR WILL BE FILED OR FURNISHED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS.  You may obtain any of the documents filed with or furnished to the SEC by Hope or Territorial at no cost from the SEC’s website at www.sec.gov.

About Us

Territorial Bancorp Inc., headquartered in Honolulu, Hawaii, is the stock holding company for Territorial Savings Bank. Territorial Savings Bank is a state-chartered savings bank which was originally chartered in 1921 by the Territory of Hawaii. Territorial Savings Bank conducts business from its headquarters in Honolulu, Hawaii, and has 28 branch offices in the state of Hawaii. For additional information, please visit https://www.tsbhawaii.bank.

Contact: Walter Ida
(808) 946-1400

FAQ

Why did Territorial Bancorp (TBNK) reject Blue Hill Advisors' acquisition proposal?

Territorial rejected Blue Hill's proposal due to its uncertainty, lack of evidence of financial backing, potential regulatory approval issues, and various conditions including a 70% tender offer requirement. The board deemed it inferior to the existing merger agreement with Hope Bancorp.

What are the main benefits of Territorial Bancorp's (TBNK) merger with Hope Bancorp?

The merger is expected to strengthen Territorial for the long term, providing advantages such as greater resources, enhanced technology platforms, and an expanded array of banking products and services, while maintaining a focus on relationship banking and personalized service.

When was the merger between Territorial Bancorp (TBNK) and Hope Bancorp announced?

The proposed merger between Territorial Bancorp and Hope Bancorp was announced on April 29, 2024.

What is the current status of Territorial Bancorp's (TBNK) merger with Hope Bancorp?

The merger agreement is fully negotiated, all required regulatory applications have been made and are being processed, and no third-party financing is required. Territorial is urging shareholders to vote 'yes' in favor of the proposed merger.