Shares of North Carolina-based bank American Community Bancshares, Inc. (ACBA) have jumped Wednesday morning on news that the company will be bought by Yadkin Valley Financial Corp. (YAVY).
The stock soared about 54%, surging $3.80 to $10.80 a share by 10:15 am Eastern Time. Shares of the company broke through resistance and reached their highest level since mid-November 2007.
Before the opening bell on Wednesday, Yadkin Valley said its wholly owned subsidiary Yadkin Valley Bank and Trust Co. signed a definitive agreement to buy American Community for about $92 million.
Yadkin Valley noted that the transaction value represented 168% of American Community's book value. Subject to shareholders and regulatory approval, the deal is expected to close no later than the beginning of the first quarter of 2009.
According to the terms of the deal, shareholders of American Community have the right to receive either $12.35 per share in cash or 0.8517 Yadkin Valley Financial shares for each share they own. However, only 19.5% of the transaction will be paid in cash and the remaining 80.5% will be paid in Yadkin Valley Financial shares.
Pursuant to the deal closing, American Community Bank will be merged into Yadkin Valley, but it will continue to operate in its market as American Community Bank and as a division of Yadkin Valley Bank and Trust Co.
"Our partnership with Yadkin Valley Financial will provide us access to the capital, technology and expertise in the products and services that we need to truly take advantage of the outstanding opportunities in our market," said American Community president and chief executive officer Randy Helton.
Helton added, "We have a high degree of confidence in the Yadkin team to join our two organizations and continue building a great North Carolina banking franchise that will best serve employees, customers and shareholders."
Yadkin Valley said it expects the transaction to be non-dilutive to its earnings in the first year of combined operations and accretive thereafter.
Bill Long, the president and chief executive officer of Yadkin Valley Financial stated, "American Community has reached a point of critical mass where the momentum for quality asset growth and profitability are present, which is particularly important to us in the current challenging environment."
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