Capital One and Hibernia Corporation Renegotiate Acquisition Price
07 September 2005 - 11:30PM
PR Newswire (US)
Capital One to Acquire Hibernia for $5.0 Billion in Stock and Cash
MCLEAN, Va. and NEW ORLEANS, Sept. 7 /PRNewswire-FirstCall/ --
Capital One Financial Corporation (NYSE:COF) and Hibernia
Corporation (NYSE:HIB) today announced that they have renegotiated
the purchase price of the Capital One acquisition of Hibernia,
which is now valued at approximately $5.0 billion. This represents
a reduction in economic value of 9 percent relative to the previous
terms. The companies now expect the transaction will close in the
fourth quarter of 2005. The companies have made careful assessments
of the potential impact of Hurricane Katrina on Hibernia. To
account for the considerable uncertainty in the aftermath of
Katrina, each company developed a range of scenarios, incorporating
the results of intensive due diligence performed over the last
week. The boards of directors of both companies have concluded that
completing the transaction under the new terms is in the best
interest of their respective shareholders. Due diligence efforts
included an initial assessment of the impact of Katrina on
Hibernia's facilities (including its retail branches and
headquarters building in New Orleans), its loan portfolio, and its
future business prospects including the significant federal and
state aid and insurance proceeds expected to be received by victims
of the hurricane in Louisiana. Hibernia will continue to assess the
expected impacts, including any expected near-term impact to third
quarter earnings. Capital One expects to update its earnings
guidance for the full year ending December 31, 2005, as well as
estimated financial impacts of the transaction in 2006 and 2007, in
connection with its third quarter earnings announcement. Status of
Hibernia's Operations Hibernia's business critical systems are up
and running to support open branches and the bank's customers. 107
of Hibernia's 321 locations are in areas impacted by Katrina. 47 of
these branches have been reopened, and work is underway to open
more as the situation allows. Of the 60 branches yet to be
reopened, 21 appear to have sustained significant damage. These 21
branches account for approximately 5 percent of Hibernia's
deposits. "Hurricane Katrina will continue to have a significant
impact on the people and communities in our region," said
Hibernia's President and CEO Herb Boydstun. "The banking community
is an essential element of the rebuilding process and we are
committed to partnering with our neighbors and communities every
step of the way. Capital One has demonstrated consistent commitment
and support to Hibernia's employees, customers, and communities,
particularly in this most challenging time." "We all know what a
difficult time this has been for the people of New Orleans and
other communities throughout Louisiana and the Gulf Coast," said
Richard D. Fairbank, Chairman and Chief Executive Officer of
Capital One. "I have been tremendously impressed by the dedication
and courage demonstrated by Hibernia's employees in the aftermath
of Katrina. While no one can predict the impact of Katrina with
certainty, I remain convinced of the strategic value of this
transaction and believe that Hibernia is well-positioned to grow
and generate significant shareholder value over time." Terms of the
Agreement Under the terms of the amendment to the merger agreement,
which has been approved by both companies' boards of directors,
Hibernia shareholders will have the right, subject to proration, to
elect to receive cash or Capital One common stock, in either case
having a value per Hibernia share equal to $13.95 plus the value at
closing of .2055 Capital One shares. Based on the price of Capital
One shares at the close of business on Tuesday, Sept. 6, 2005, of
$80.50, the transaction is valued at $30.49 per Hibernia share. The
actual value on consummation of the acquisition will depend on
Capital One's share price at that time. The total transaction value
of approximately $5.0 billion, based on Capital One's closing share
price of Sept. 6, 2005, includes approximately $2.2 billion in
cash. The transaction is subject to the satisfaction of customary
closing conditions, including Hibernia shareholder approval of the
revised terms, and is expected to close in the fourth quarter of
2005. The impact of hurricane- related actions and events will be
disregarded in determining whether closing conditions are
satisfied. Hibernia shareholders who have made elections as to
their preferred form of merger consideration will be allowed to
withdraw those elections. All shareholders will be given the right
to make new elections until the business day prior to the Hibernia
shareholder meeting to be held to approve the revised transaction.
The companies expect to communicate promptly with Hibernia
stockholders regarding the procedure for withdrawing existing
elections. Additional Information About this Transaction In
connection with the proposed merger, Capital One will file with the
SEC a post-effective amendment to its Registration Statement on
Form S-4 that will include a new proxy statement of Hibernia that
also constitutes a prospectus of Capital One. Hibernia will mail
the proxy statement/prospectus to its stockholders. Investors and
security holders are urged to read the proxy statement/prospectus
regarding the proposed merger when it becomes available because it
will contain important information. You may obtain a free copy of
the proxy statement/prospectus (when available) and other related
documents filed by Capital One and Hibernia with the SEC at the
SEC's website at http://www.sec.gov/. The proxy
statement/prospectus (when it is available) and the other documents
may also be obtained for free by accessing Capital One's website at
http://www.capitalone.com/ under the tab "Investors" and then under
the heading "SEC & Regulatory Filings" or by accessing the SEC
homepage at http://www.sec.gov/. Capital One, Hibernia and their
respective directors, executive officers and certain other members
of management and employees may be soliciting proxies from Hibernia
stockholders in favor of the merger. Information regarding the
persons who may, under the rules of the SEC, be considered
participants in the solicitation of the Hibernia stockholders in
connection with the proposed merger will be set forth in the proxy
statement/prospectus when it is filed with the SEC. You can find
information about Capital One's executive officers and directors in
its definitive proxy statement filed with the SEC on March 21,
2005. You can find information about Hibernia's executive officers
and directors in its definitive proxy statement filed with the SEC
on March 15, 2005. You can obtain free copies of these documents
from Capital One and Hibernia using the contact information above.
Forward-looking statements Information in this press release
contains forward-looking statements, which involve a number of
risks and uncertainties. Capital One and Hibernia caution readers
that any forward-looking information is not a guarantee of future
performance and the actual results could differ materially from
those contained in the forward-looking information. Among the
factors that could cause actual results to differ materially are
the following: the impact of property, credit and other losses
expected as the result of Hurricane Katrina; the amount of
government, private and philanthropic investment, including
deposits, in the geographic regions impacted by Hurricane Katrina;
the pace and magnitude of economic recovery in the region impacted
by Hurricane Katrina; the potential impact of damages from future
hurricanes and other storms; continued intense competition from
numerous providers of products and services which compete with
Capital One's or Hibernia's businesses; an increase or decrease in
credit losses (including increases due to a worsening of general
economic conditions); financial, legal, regulatory or accounting
changes or actions; changes in interest rates; general economic
conditions affecting consumer income, spending, repayments and
savings; the amount of, and rate of growth in, Capital One's and
Hibernia's expenses (including salaries and associate benefits and
marketing expenses); Capital One's and Hibernia's ability to
execute on their respective strategic and operational plans; the
ability of Capital One and Hibernia to recruit and retain
experienced personnel to assist in the management and operations;
the risk that the businesses of Capital One and Hibernia will not
be integrated successfully; the risk that the cost savings and any
other synergies from the transaction with Hibernia may not be fully
realized or may take longer to realize than expected; disruption
from the transaction making it more difficult to maintain
relationships with customers, employees or suppliers; and other
risk factors listed from time to time in Capital One's and
Hibernia's SEC reports, including, but not limited to, the
Quarterly Reports on Form 10-Q for the quarter ended June 30, 2005.
About Capital One Headquartered in McLean, Virginia, Capital One
Financial Corporation (http://www.capitalone.com/) is a financial
holding company whose principal subsidiaries, Capital One Bank,
Capital One, F.S.B. and Capital One Auto Finance, Inc., offer a
variety of consumer lending products. As of June 30, 2005, Capital
One's subsidiaries collectively had 48.9 million accounts and $83.0
billion in managed loans outstanding. Capital One is a Fortune 500
company and, through its subsidiaries, is one of the largest
providers of MasterCard and Visa credit cards in the world. Capital
One trades on the New York Stock Exchange under the symbol "COF"
and is included in the S&P 500 index. About Hibernia Hibernia
is on Forbes magazine's list of the world's 2,000 largest companies
and Fortune magazine's list of America's top 1,000 companies
according to annual revenue. Hibernia has $22.1 billion in assets
as of June 30, 2005 and 321 locations in 34 Louisiana parishes and
36 Texas counties. Hibernia Corporation's common stock (HIB) is
listed on the New York Stock Exchange. DATASOURCE: Capital One
Financial Corporation; Hibernia Corporation CONTACT: Investors:
Mike Rowen, +1-703-720-2455, or Media: Tatiana Stead,
+1-703-720-2352, both of Capital One Financial Corporation; or
Investors: Trisha Voltz, +1-504-533-5179, or Media: Steven Thorpe,
+1-713-435-5054, both of Hibernia Corporation Web site:
http://www.capitalone.com/
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