On June
29, 2005, East West Bancorp, Inc., a California corporation (“East West
Bancorp”), its wholly owned subsidiary, East West Bank, a California state bank
(“East West Bank”), United National Bank, a national banking association
(“UNB”), and an individual shareholder owning approximately 99.99% of UNB’s
outstanding stock (the “Principal Shareholder”), entered into an Agreement and
Plan of Merger (the “Merger Agreement”), pursuant to which UNB will merge with
and into East West Bank, with East West Bank as the surviving bank (the
“Merger”).
The
Merger Agreement has been approved by the Boards of Directors of East West
Bancorp, East West Bank, and UNB. In addition, concurrently with the execution
of the Merger Agreement, the Principal Shareholder and each member of UNB’s
Board of Directors, who hold the remaining .01% of UNB’s outstanding stock,
approved the Merger Agreement and the Merger by unanimous written consent.
Accordingly, UNB will not hold a shareholders’ meeting to vote upon the Merger
or the Merger Agreement. Due to the size of the transaction, East West Bancorp
is not required to solicit its shareholders’ approval.
The
consideration to be paid in the Merger is a combination of cash and stock equal
to 2.3 times UNB’s shareholders’ equity, subject to certain adjustments (the
“Merger Consideration”). The Merger Consideration will consist of either 60% or
70% East West Bancorp common stock, with the remainder in cash. The Principal
Shareholder will elect the proportion of cash versus stock on or before the
fifth trading day prior to the effective date of the Merger. The aggregate
consideration to be paid in the Merger, if consummated as of March 31, 2005,
would be approximately $164.7 million, based upon UNB’s shareholders’ equity as
of that date.
The
Merger Agreement contains customary representations and warranties of the
parties and customary covenants, including a covenant on the part of UNB and the
Principal Shareholder not to solicit, provide confidential information with
respect to, or otherwise encourage competing acquisition proposals.
Consummation
of the Merger is conditioned upon, among other things, (i) regulatory approval,
(ii) the absence of any laws or other similar orders prohibiting the
consummation of the Merger, (iii) the accuracy of the representations and
warranties contained in the Merger Agreement, (iv) each party having performed
all of its obligations under the Merger Agreement, (v) the delivery by UNB of
financial statements reflecting the financial condition of UNB as of the end of
the calendar month immediately prior to the closing of the Merger, and (vi) UNB
having a certain minimum allowance for loan and lease losses as of the end of
the calendar month immediately prior to the closing of the Merger.
The
Merger Agreement may be terminated if (i) the parties mutually agree to such
termination, (ii) regulatory approval is not received, or (iii) the Merger is
not consummated by December 31, 2005. If the Merger Agreement is terminated as a
result of a breach by East West Bancorp and East West Bank, on the one hand, or
UNB on the other hand, the non-breaching party is entitled to a termination fee
of $3 million as liquidated damages.
The
Merger will be completed as soon as is practicable after all regulatory
approvals have been obtained and all other conditions in the Merger Agreement
have been satisfied or waived.
This
description of the Merger and the Merger Agreement is a summary only and is
qualified by reference to the full text of the Merger Agreement which shall be
filed with East West Bancorp’s quarterly report on Form 10-Q for the second
quarter of 2005.